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Money lending: Obtaining blank cheques to become illegal

Sunday, 11 May 2014 - 6:50am IST | Agency: dna

Obtaining blank cheques in lieu of money lent may soon become illegal as the state co-operatives department now proposes to amend the Maharashtra Money Lending (Regulation) Act to ensure that such transactions do not take place and those who borrow money are not blackmailed.

"Even in cities and small towns, small-time moneylenders obtain blank cheques from borrowers, and if they default in paying the interest or repaying the loan amount, they are blackmailed with these blank cheques. Moneylenders then try to usurp the property of the victims. We want to put an end to this practice," said a co-operative dept official.

This is not all, the Maharashtra Money Lending (Regulation) Act is also likely to be amended to do away with the provision of five-year limitation for probing cases of illegal money lending. The limit will be extended to 15 years.

The amendment, after being passed in the cabinet, will be brought before the legislature for approval.

The Act is meant to regulate transactions of money lending in the state, and it was first proposed in 2002, but was finally passed by the legislature and came into force only in February-March 2014.

However, even after it came into force, the Opposition and those fighting for farmers' rights demanded that the five-year limit be extended to at least 15 years.

"The amendments will be placed before the legislature only after they are approved by the cabinet. We will hopefully bring it in the next session of the legislature," said an official in the co-operatives department.

The Act has provisions for ensuring that the land grabbed by moneylenders are returned. And moneylenders will have to return all documents pertaining to mortgaged property once the loan is repaid. Besides, they can charge only 9% to 12% interest per year, and after every month, government registrars will review transactions. The bill also has provision for penalty of Rs 50,000 and five years imprisonment for illegal money-lending activities, and licensed lenders will have to strictly adhere to norms. They will attract a penalty of up to Rs 25,000 and imprisonment of up to a year in case of violations.

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