Money Lender License

Ozg Money Lenders’ Advisor

Ozg Compliance & Regulatory Practice Center

Email: ask@moneylender.co.in

Website: gujarat.moneylender.co.in

GUJARAT MONEY LENDERS ACT, 2011

Definition of the term “loan” is of wide import and inclusive:

Sec. 2(9) – “loan” means – an advance whether of money or in kind at an interest
with or without security.

Further, every agreement under any law for the time-being in force (whatever its terms or form may be) which is in substance or effect a  loan of money is included.

An agreement of Hire Purchase (which essentially is a Finance Lease) is in substance a loan of money and is included in the definition of the term “loan”.

3. Obligations and Duties of Moneylenders
a.      Registration
b.      Renewal of Registration after every 5 years
c.       i.   Maintain Accounts – Cash Book, Ledger, Register of Debtors / Register of Securities, etc in the prescribed form ii.  On the day of advance of loan – Deliver to the debtor a.       A Statement showing the Name and Address of Money lender and of the debtor, date & amount of loan, date of maturity, nature of security and rate of interest.
b.       A Passbook containing an up-to date and true account of all transactions relating to the loan.
iii.     Issue Receipt – On receipt of a payment from a debtor – or On Receipt of any security from the debtor
iv.      Every year within 30 days of the end of the year, – Issue Statement of Yearly accounts to the Debtors, every year.
All documents referred to in para C. are to be issued in local language (or if the debtor, so demands, in Hindi or English).
d.      Audit of Accounts by a Chartered Accountant.
e.       Not to dispose of any security from a debtor – before a period of two years from the date stipulated for the final repayment of the loan.
i.e, If date of loan is 1 April 2011 for 24 installments – last repayment is due on 1 April 2013 – two years after i.e., 1 April 2015 – you cannot dispose of the security.
f.       Charge Simple Interest. Interest on Interest cannot be charged.
g.       Cannot charges Expenses such as file charges, etc. Only expenses for investigating the title of the property, mortgage, stamp duty, etc. can be charged.
4. State Government will fix the Maximum rates of interest.

Ozg Money Lenders’ Advisor

Ozg Compliance & Regulatory Practice Center

Email: ask@moneylender.co.in

Website: gujarat.moneylender.co.in

5. In Suits

a. Stay of suits of money lender not holding a valid registration.
b. If money-lender has not complied with the requirement of account and audit, then,
i. Interest recovery, wholly or partly, disallowed.
ii. Cancellation or suspension of registration.
c. Interest cannot be recovered in a Suit. (No court shall order/ decree recovery of sum greater than the principal of the loan due on the date of decree.)

6.      Penalties & Prosecution provided for under the act for various non-compliance.

7.      The State Government has the power to Exempt by General or Special Order – a class of Money lenders from all or any of the provisions of the Act – subject to such conditions & for such period as may be specified in the Order.

For more info, pls book an appointment with Ozg Experts at all major cities in Gujarat via – ozgcenter.com/appointment

Ozg Money Lenders’ Advisor

Ozg Compliance & Regulatory Practice Center

Email: ask@moneylender.co.in

Website: gujarat.moneylender.co.in

Maharashtra Money-Lending (Regulation) Ordinance, 2014

A licence shall be valid from the date on which it is granted to the 31st day of March following:

Provided that, where an application for renewal of licence has been received by the Assistant Registrar within the prescribed period, the licence shall, until the application is finally disposed of, be deemed to be valid.

  1. (1) The District Registrar may, during the term of any licence, cancel the same by an order in writing on the ground that the person to whom it was granted has been guilty of any act or conduct for which he might, under section 8, have refused him the grant of the licence and which act or conduct was not brought to his notice at the time of the grant.

(2) Before cancelling a licence under sub-section (1), the District Registrar shall give notice in writing to the licencee and may hold such inquiry as may be necessary.

(3) An appeal shall lie from an order of the District Registrar cancelling a licence under sub-section (1), to the Divisional Registrar whose decision thereon shall be final.

(4) An appeal against the order of the District Registrar under sub- section (1) may be filed within three months from the date of the order :

Provided that, the Divisional Registrar may, for the reasons to be recorded, entertain the appeal after the expiry of the period of three months from the date of the order of the District Registrar under sub-section (1), if he is satisfied that the appellant was prohibited, for the reasons beyond his control, from filing the appeal within the period of three months.

Ozg Money Lenders’ Advisor

Ozg Compliance & Regulatory Practice Center

Email: ask@moneylender.co.in

Website: maharashtra.moneylender.co.in

Limitation on Interest –

(1) The State Government may, from time to time, by notification in the Official Gazette, fix the maximum rates of interest to be charged by a money-lender in respect of secured loan and unsecured loan.

(2) No money-lender shall receive from a debtor or intending debtor any sum by way of compound interest on a loan advanced or intended to be advanced or any sum by way of interest at a rate higher than the rate fixed under sub-section(1).

(3) Notwithstanding anything contained in any other law for the time being in force, a money-lender shall not charge or recover from any debtor, on account of interest, a sum greater than the amount of principal of loan whether advanced before or after commencement of this Ordinance.

(4) Notwithstanding anything contained in any other law for the time being in force, no agreement between a money-lender and a debtor for payment of interest at rates exceeding the maximum rates fixed by the State Government under sub-section (1) and no agreement in contravention of the provision of sub-sections (2) and (3) shall be valid.

32.(1) No money-lender shall receive from a debtor or intending debtor any sum other than reasonable costs of investigating title to the property, costs of stamp, registration of documents, and other usual out of pocket expenses in cases where an agreement between the parties includes a stipulation that property is to be given as security or by way of mortgage and where both parties have agreed in writing to such costs and reimbursement thereof or where such cost, charges or expenses are leviable under the provisions of the Transfer of Property Act, 1882, or any other law for the time being in force.

(2) Any sum received by a money-lender in contravention of sub-section (1) from a debtor or intending debtor on account of costs, charges or expenses referred to in that sub-section shall be recoverable from the money-lender as debt due from him to the debtor or, as the case may be, intending debtor, or shall be liable to be set off against the loan actually lent to the debtor or intending debtor.

For more info, pls book an appointment with Ozg Experts at all major cities in Maharashtra via – ozgcenter.com/appointment

Ozg Money Lenders’ Advisor

Ozg Compliance & Regulatory Practice Center

Email: ask@moneylender.co.in

Website: maharashtra.moneylender.co.in

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