Matter
of taking money on loan and repaying with interest is a normal practice in
India and also in rest of the world. But rate of interest plays very important
role in deciding if deal is fair or not. If debtor refuses to pay the loan then
we feel that court need to direct police to make debtor repay the loan but at
the same time think that if debtor feel that he is being charged exorbitant interest
then court should not interfere in deal of two persons entered by their own
wish. Why should government interfere if debtor refuses to repay the loan and
keep silent when creditor is exploiting the debtor?
Government
need to protect both creditor and debtor. The government needs to make sure
that debtors repay their loans and at the same time fix a maximum rate of
interest which can be charged to debtor so that debtors are not exploited. In
India various state governments have enacted laws to regulate maximum rate of
interest but still very few people are aware of existence of such regulation
and current maximum rate of interest allowed by law. Here I would like to
discuss various laws governing loans and interests in India.
THE
USURIOUS LOANS ACT, 1918 declared that no farmer - debtor was liable to pay by
way of interest an amount exceeding principal of the loan.
It
means that no person can be forced to pay interest more than principal over the
full tenure of the loan.
Karnataka
and Kerala states have enacted their own laws to govern maximum rate of
interest allowed. Other states also have similar laws. These acts says
that maximum rate of interest will be notified by government from time to time
but our people sitting in media are themselves involved in business of giving
loans on exorbitant interest so they never report maximum rate of interest
allowed as per law. As per latest information received by me maximum rate of
interests allowed is 2% per month.
- THE KARNATAKA PROHIBITION OF CHARGING EXORBITANT INTEREST ACT 2004 (http://dpal.kar.nic.in/pdf_files/14%20of%202004%20%28E%29.pdf)
- THE KERALA PROHIBITION OF CHARGING EXORBITANT INTEREST BILL, 2012 (http://niyamasabha.org/bills/13kla/published/114-pub-eng.pdf)
- The Andhra Pradesh Micro Finance Institutions (Regulation of Money Lending) Rules 2010 (http://apmfi.cgg.gov.in/downloads/2010PR_MS356.PDF)
- National Consumer Dispute Redressal Forum Case (http://ncdrc.nic.in/CC512007.html)
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