New Delhi. You must have seen many films of moneylenders who distribute money on interest and oppress the borrower. But, a truth more horrifying than the film stories has come to light in Chandrapur district of Maharashtra. Where a moneylender gave a loan of Rs 1 lakh to a farmer and by adding interest he made it Rs 70 lakh. When the farmer could not repay the loan, the moneylender removed his kidney and sold it. Now the question arises whether usury is still legal in the country or is there any law against it. If there is a law then what provision for punishment or fine has been made in it.
Before giving information about the law, let us look at this matter. This farmer from Maharashtra had taken a loan of only Rs 1 lakh from the moneylender. An interest of Rs 10,000 was being charged daily on this. To repay this loan of Rs 1 lakh, the farmer sold 2 acres of his land, also sold his tractor and other valuables. In the end, he also sold his kidney for Rs 8 lakh, but neither the debt of the moneylenders nor their oppression ended. The victim farmer also complained to the police, but nothing happened. Now this family has appealed for justice from the government and has threatened to commit suicide along with the family.
What is the law on usury in India?
Till now, distributing money on interest has not been made illegal in the country. However, it is regulated by the Money Lenders Act of the states and the Usury Loan Act, 1918 of the Centre. Usury has not been banned, but in cases like charging of excessive interest, a complaint can be made in the civil court, where the court can reduce the interest rates or cancel the transaction itself. However, despite these provisions, criminal punishment is extremely limited.
What does the central law say?
The Usurious Loans Act 1918 of the Central Government applies only to private borrowers. If a moneylender charges excessive interest or does unfair transactions, then after the complaint, the court can waive the extra interest in such a case or order to return the excess interest charged. The court can also determine the interest on its own behalf, but all this relief will be of civil category, where criminal punishment cannot be given.
What do the state laws say?
According to the Money Lenders Act of states like Maharashtra, Rajasthan, Telangana and Karnataka, it is necessary to obtain a license before starting the business of loan distribution. If there is no license then there can be a jail term ranging from 3 months to 3 years along with fine. In Karnataka, interest of more than 18 percent per annum is considered illegal. In Kerala, in such cases, imprisonment of 3 years and a fine of Rs 5,000 can be imposed.
When is a criminal case registered?
If there is harassment by moneylenders in the matter of distributing illegal loans, then a criminal case can be registered. In this, under section 384, 506 of IPC, there can be a jail term of 7 to 10 years. Usury is not a crime under the IPC, but if threats, assault or other harassment are used for extortion, a case can be registered and then there is a provision for punishment. As happened in the case of this farmer from Maharashtra.
Government making new law
In December last year, the Central Government had started the exercise of making a new law to stop usury. For this, the government has also released the draft of Banning of Unregulated Lending Activities (BULA) Bill. Under this draft, for irregular loan distribution, jail term of 2 to 7 years and fine of Rs 2 lakh to Rs 1 crore can be imposed. If illegal extortion or harassment is done then there can be a punishment of 3 to 10 years. In such cases, a penalty double the loan amount may also be imposed. At present it is proposed and has not been implemented yet. After its implementation, irregular lending can be banned.
