China ‘granny gang’ jailed in lending clampdown

BEIJING — A Chinese court has sentenced 14 members of a roving band of elderly female debt collectors to as many as 11 years in jail, in the latest sign of the country’s clampdown on informal channels of lending.

A court in the mountainous province of Henan this week found that members of the “granny gang”, as local media dubbed them, used loudspeakers to publicly cajole and intimidate borrowers into paying up.

The women, aged 50 to 70, were found guilty of engaging in “provocative and disturbing behaviour” that resembled “participating in gangster-like organisations”. The women were largely unemployed and looking for work when local debt-collection agencies recruited them at outdoor dancing classes in 2013.

In return for helping secure loan repayments, the “grannies” received 200 yuan (S$45) per day as well as meals. “I had nothing to do every day. When I was asked to help, I did it as a kind of fun,” Gao Yun, one of the women, told a local newspaper.

The grannies employed a variety of tactics, including hitting and spitting at borrowers. A more common method was to give debtors an aggressive verbal dressing down until they handed over the money. On their most recalcitrant targets, the women took more creative measures.

In one 2015 incident, eight of the women began stripping to intimidate male borrowers to pay up, according to an interview that a debtor surnamed Zhao gave to local media. “Loan sharks use these methods frequently: harassing a person, encircling them, going to their workplace and not leaving,” said Mr Han Chuanhua, a lawyer at Beijing’s Zhongzhi Law Office. “Using grannies or elderly people is just one of the ways I have seen loan sharks do this to collect debts.”

The case of the granny gang is the latest in a string of lurid incidents over debt collection in China.

Central bank statistics show that non-bank lending is one of the fastest-growing forms of credit in the country. Because China lacks a uniform credit system — making access to financing difficult — borrowers often turn to an informal network of shadow banks for loans that can carry interest rates as high as 10 to 15 per cent per month.

However, shadow lenders do not have legal recourse to recover loans, meaning collectors sometimes turn to unorthodox and even violent tactics to press borrowers into repaying. China’s economic boom was in part financed by high-interest credit, but growing defaults on debt are now exposing the darker side of such financing.

In February, a 23-year-old man was sentenced to life in prison after killing a debt collector and wounding three others after they assaulted his mother. The case fuelled public outrage over the aggressive methods of loan sharks.

Last year, authorities disrupted a ring of blackmailers offering high-interest, short-term loans. Under the scheme, borrowers — mostly young university students — were required to submit nude selfies as collateral, which loan sharks threatened to leak if they failed to pay up.

However, kidnapping still remains the most common method for extorting payment. In late July, a group of investors took the employees of an Australian brokerage in Shanghai hostage after the company lost US$2.6 million (S$3.54 million) in foreign currency trades that week. All hostages were eventually released. FINANCIAL TIMES