Prac Research 1

I.
Backround of the Study
This research proposes on the study of Five-Six Money lenders, so-
called because of the manner in which they lend. The term “five-six” comes from
the high profit, which is at around 20 percent, that these untrustworthy loaners
take advantage of. Meaning, for every P5 loaned from them, must pay P6. Let's
be honest: borrowing from five-six lenders is tempting due to its convenient
terms.
The “5-6” lending plan is the act of issuing small loans with a large
profit of twenty percent. Neither Filipino nor Indian 5-6 moneylenders require
security or documents from their borrowers. The success of a borrower’s
business and loan repayment history provide a basis of the borrower’s reliability.
Most Filipinos have experienced borrowing money from family members, a
friend, a moneylender, a “Bombay,” or a bank.
Even business owners borrow money, let alone those who work at a
minimum income each day. “Utang” has been a part of the Filipino culture,
relevant enough to have caught the attention of Pres. Rodrigo Duterte. He stated
that there is nothing wrong with money-lending businesses though 5-6 lending
scheme can be a disadvantage to Filipinos. Duterte complained how the loan

sharks had taken advantage of the situation of government workers, including
teachers, pushing them into deeper debt.
As a growing country, Philippines has a large informal sector that
consists of micro-business. Although 5-6 Money Lending is considered illegal in
the country, the government turned a blind eye on it for decades. The profit rates
might be inflated for this type of lending, still, the majority of the Filipinos benefits
themselves for this service. They said that the availability of the money was
rather quick and the process was fast, yet some argued that it was a hassle.
Studies on micro-financing were conducted by the Philippine Institute
of Development Studies (PIDS), the Social Weather Stations, and other
organizations by the late 1980s and 1990s. Their purpose was to see the
concept of both informal and formal micro-financing institution, unfortunately the
differences across organizations by ethnicity were not emphasized. As a result,
even if Indian financiers are widely known among Filipinos, the studies about the
practices of their business are nearly non- existent.
Indian financiers, also known as 'Bombay', are people of South Asian
ancestry who operates money lending. The Department of Foreign Affairs must
be attentive in checking the legality of the Indian foreigners who are entering the
country. Considering that these Indian Money Lenders will obey with the legal
requirements, they will be protected by the law and authorities against these
problems that they often encounter in carrying out their business.
The main function of moneylenders is to give short-term loans. Loans
may be given for consumption purposes, to meet social and religious obligations
or the needs of farmers for seeds, cattle, fertilisers, etc. Loans are generally
given on the personal security of borrowers.
However, grant of loans on the security of costly things in urban
areas and against land or crop in rural areas; is also common. They have
personal contacts with the borrowers who approach them directly and informally.
The moneylenders normally lend their own funds.
Since the moneylenders have a personal knowledge about the
creditworthiness of borrowers they adopt rigid or flexible attitude while lending,
charging interest, and recovery of loans. They charge excessively high rates of
interest. The non-professional moneylenders prefer to lend in kind.
The importance of moneylenders is immense in Philippines
because of the inadequacy of institutional financing agencies like commercial
banks and cooperative banks. They meet the short-term monetary requirements
of farmers, landless agricultural workers, marginal farmers, rural artisans, and
petty shopkeepers and traders. They give loans for consumption needs, for
social and religious ceremonies, and for such productive purposes as seeds,
fertilisers, cattle etc.

II. Statement of the Problem
The primary objective of this research is to explain why Filipinos are still into five-
six lending scheme
Specifically, this study aims
·0 to compare formal and informal financers
·1 to analyze how five-six lending scheme works in vendor's businesses
·2 to verify if five-six lending scheme is helpful or inconvenient for filipinos
III. Conceptual Framework

Financer is someone who provide money. There are two categories of financers
which is formal and informal. Five-Six lending scheme are one of the examples of
informal financer. We are going to find out if it is really helpful or incovenient for
the borrowers.
IV. Literature Review
A. SHYLOCK VS. ANTONIO: INFORMAL MONEY LENDING IN RURAL
COMMUNITIES IN THE JAMAN NORTH DISTRICT, GHANA
Simon Mariwah
Agriculture one of the contributors to a developing countries’ economy and
its enterprise development and sustainability cannot be stressed. A country can
benefit from its agricultural resources indirectly and directly stable. For instance,
for many of rural people, who are mainly dependent on agriculture, a poor
harvest or a low harvest price can threaten disaster, even if, on average,
agricultural incomes are enough to provide sustainable standard of living for
them. In such circumstances, the protection of living standards requires that
resources be transferred across time, from good years to bad years according to
Deaton, 1992.
In Ghana, however, successive governments, Non-Governmental Organisations
(NGOs) and the private sector have implemented various agricultural and rural
credit arrangements address shortage problem of agricultural employment and
productivity. The example in this study is that: rural banks were introduced into
Ghanaian rural areas, ostensibly to improve the availability of credit to farmers.
This is because microfinance is expected to fight against poverty. There are
seven formal financial institutions, comprising four rural banks, one commercial
bank and two credit unions in Ghana. There were not much are equally
accessible to the farmers in the district.
According to Deaton (1992) “individuals in poor countries borrow and lend
money, and perhaps do so to prevent shortfalls in consumption.” This means that
a lot of consumers may never wish to borrow money from other people. However,
building up assets as they go can result to temporary short falls of income are
unlikely to present a problem, except perhaps early in life.
B. TWO ESSAYS ON BORROWING FROM BANKS AND LENDING
SYNDICATES
C. (DIS)ADVANTAGES OF INFORMAL LOANS - THEORY AND EVIDENCE
D. SHARE OF THE INFORMAL LOANS IN TOTAL BORROWING IN
PAKISTAN: A CASE STUDY OF DISTRICT PESHAWAR
E. PAUTANG NAMAN: A COMPARATIVE STUDY OF AUTHORIZED AND
AUTHORIZED MONEY LENDING IN THE PHILIPPINES
F. I AM SHARING 'OF INFORMAL MONEY LENDING BUSINESS TO MICRO-
ENTREPRENEURS
G. INFORMAL LOAN TRAP: BOMBAY 5-6 AND IT'S EFFECTS ON MICRO-
ENTREPRENEURS IN TACLOBAN CITY, PHILIPPINES
H. DEMAND FOR CREDIT AMONG SMALL FARMERS: A CASE STUDY OF
DISTRICT MANDI BAHAUDDIN, PAKISTAN
I. THE IMPACT OF MONEY LENDING INSTITUTIONS ON SMALL AND
MEDIUM ENTERPRISES: A CASE STUDY OF SHALOM LENDING
ENTERPRISE
J. INDIAN MONEY LENDERS IN VIRAC, CATANDUANES
V. Methodology
In this kind of research, Qualitative Method is suitable and most
convenient research design. It is collected through methods of observations, one-
to-one interview, conducting focus groups and similar methods. In Interviews, in
order for us to collect informations, we will be using Semi-structured Interview.

The data sampling we will apply in our research is Snowball sampling. It is
helpful because the respondent we would Interview, would refer another people
to be our respondent.
VI. Bibliography

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I.

Backround of the Study

This research proposes on the study of Five-Six Money lenders, so-

be honest: borrowing from five-six lenders is tempting due to its convenient

security or documents from their borrowers. The success of a borrower’s

Most Filipinos have experienced borrowing money from family members, a

friend, a moneylender, a “Bombay,” or a bank.

scheme can be a disadvantage to Filipinos. Duterte complained how the loan

teachers, pushing them into deeper debt.

As a growing country, Philippines has a large informal sector that

consists of micro-business. Although 5-6 Money Lending is considered illegal in

Studies on micro-financing were conducted by the Philippine Institute

of Development Studies (PIDS), the Social Weather Stations, and other

concept of both informal and formal micro-financing institution, unfortunately the

differences across organizations by ethnicity were not emphasized. As a result,

practices of their business are nearly non- existent.

Indian financiers, also known as 'Bombay', are people of South Asian

The main function of moneylenders is to give short-term loans. Loans

given on the personal security of borrowers.

However, grant of loans on the security of costly things in urban

The moneylenders normally lend their own funds.

Since the moneylenders have a personal knowledge about the

creditworthiness of borrowers they adopt rigid or flexible attitude while lending,

interest. The non-professional moneylenders prefer to lend in kind.

The importance of moneylenders is immense in Philippines

because of the inadequacy of institutional financing agencies like commercial

of farmers, landless agricultural workers, marginal farmers, rural artisans, and

fertilisers, cattle etc.

six lending scheme

Specifically, this study aims

·0 to compare formal and informal financers

·1 to analyze how five-six lending scheme works in vendor's businesses

·2 to verify if five-six lending scheme is helpful or inconvenient for filipinos

III. Conceptual Framework

IV. Literature Review

A. SHYLOCK VS. ANTONIO: INFORMAL MONEY LENDING IN RURAL

COMMUNITIES IN THE JAMAN NORTH DISTRICT, GHANA

Agriculture one of the contributors to a developing countries’ economy and

its enterprise development and sustainability cannot be stressed. A country can

agricultural incomes are enough to provide sustainable standard of living for

them. In such circumstances, the protection of living standards requires that

In Ghana, however, successive governments, Non-Governmental Organisations

credit arrangements address shortage problem of agricultural employment and

Ghanaian rural areas, ostensibly to improve the availability of credit to farmers.

This is because microfinance is expected to fight against poverty. There are

accessible to the farmers in the district.

According to Deaton (1992) “individuals in poor countries borrow and lend

money, and perhaps do so to prevent shortfalls in consumption.” This means that

unlikely to present a problem, except perhaps early in life.

B. TWO ESSAYS ON BORROWING FROM BANKS AND LENDING

D. SHARE OF THE INFORMAL LOANS IN TOTAL BORROWING IN

PAKISTAN: A CASE STUDY OF DISTRICT PESHAWAR

E. PAUTANG NAMAN: A COMPARATIVE STUDY OF AUTHORIZED AND

AUTHORIZED MONEY LENDING IN THE PHILIPPINES

F. I AM SHARING 'OF INFORMAL MONEY LENDING BUSINESS TO MICRO-

G. INFORMAL LOAN TRAP: BOMBAY 5-6 AND IT'S EFFECTS ON MICRO-

ENTREPRENEURS IN TACLOBAN CITY, PHILIPPINES

H. DEMAND FOR CREDIT AMONG SMALL FARMERS: A CASE STUDY OF

DISTRICT MANDI BAHAUDDIN, PAKISTAN