Cash experts advise Indian labourers how to avoid debt and jail

Credit cards and quick loans become stumbling blocks for low-income workers who are already in debt when they arrive.

Workers listen to Deepti Ummat (right), who volunteered to advise them on how to pay off their debts.

DUBAI // Indian labourers are being offered help to stay out of debt after figures show more than 40 per cent of prisoners in the emirate are in jail because of the problem.

The Indian Institute of Management's alumni committee held a seminar at Dubai Investment Park's Ramla Mall on Friday.

Jails are filled with people who have failed to meet their commitments from loans or credit cards, the group said.

Financial offers should come with a health warning "just like cigarettes", said Dr Suresh Nanda, a Dubai investment banker. "Banking is extremely injurious to your health."

KV Shamsudeen, the director of Barjeel Geojit Securities, said there were two facets to the debt problem.

"Low-income expatriates arrive here in debt and their debts are compounded by their families who start spending excessively because their sons are working in the Gulf," he said. "They come to the Gulf after paying an average of 40,000 Indian rupees [Dh3,300] and expect to repay it after they receive their salary, but then they get faced with reality."

Many labourers were prey to banking agents who presented them with deals that were beyond their abilities to fulfil, Mr Shamsudeen said.

Six alumni members lectured a crowd of more than 60 workers about the dangers of credit cards and loans. Besides the high interest rates, insurance premiums that are added to credit cards can boost fees even higher. "Credit cards are one of the most expensive forms of taking a loans," one member said.

The session also featured one-on-one counselling with workers on how to restructure their debt.

Saji George Kutty, 36, an electrician with Drake & Scull, has raked up debt of more than Dh60,000 during the past three-and-a-half years. He sends Dh800 from his Dh1,200 monthly salary home, using the remainder to live on and pay off loans. "I got the loan to build a small home for my family in India, I also owe debt for getting my employment contract," Mr Kutty said. "I dream of paying all my debts back and going back home to marry and settle."

Mr Shamsudeen told him to cut back on the amount he sends home, get an interest-free loan from friends to offset interest charges, and negotiate a lower interest rate.

"Some companies provide their employees with interest-free loans in the UAE but most do not, especially to low income workers who have the biggest problems," he said.

The alumni members asked the workers to be vigilant, and avoid using credit cards or loans to buy items, vacations or weddings they cannot afford. They advised against getting into the habit of making minimum payments.

The lecture was organised by the non-profit group SmartAdopt, launched last May to help blue collar workers through qualified members of Indian society.