Two Indian medical students were arrested in the Philippines for allegedly running a “pautang” (loan collection) scheme, highlighting ongoing issues with informal lending operations involving foreign nationals. 

Police reports indicate that the suspects were caught while collecting payments from borrowers, a practice that has long been associated with Indian nationals in local communities.

The arrests took place in March 2026, with authorities confirming that the suspects were medical students enrolled in a Philippine university. They were accused of engaging in unlicensed lending activities, commonly known as “5-6,” where loans are extended with high interest rates and collected daily or weekly.

According to police accounts, the students were apprehended after complaints from borrowers who claimed harassment and intimidation during collections. Investigators said the suspects failed to present proper permits or licenses to operate a lending business, which is required under Philippine law.

The case comes amid heightened scrutiny of foreign nationals involved in informal lending schemes. In recent years, several incidents have been reported where Indian nationals engaged in “pautang” operations were either arrested or targeted by criminals while collecting payments. In one related case earlier this month, an Indian national was shot dead in Albay while collecting debts at a public market, underscoring the risks tied to the practice.

Authorities stressed that while lending itself is not illegal, operating without proper registration and charging excessive interest rates violates financial regulations. The arrested students now face charges under the Lending Company Regulation Act of 2007 and may also be deported for violating visa conditions.

Local officials have urged residents to avoid borrowing from unlicensed lenders, warning that such arrangements often lead to exploitation and financial distress. Consumer groups are also calling for stronger enforcement against informal lending networks, which they say thrive in areas where access to formal credit remains limited.