The Andhra Pradesh government proposes to enact AP Money Lenders and Accredited Loan Providers Act, 2010, on the lines of a model bill suggested by the Reserve Bank of India.
The objective of the new legislation is to have a uniform law regulating money lending, removing the existing abuses and malpractices in the business and to protect the debtor, particularly farmers, from payment of abnormal interest rates.
The proposed Act, which consolidates the existing four laws pertaining to money lending in the state, provides for appointment of registering authorities for registration of money lenders and accredited loan providers.
Every registering authority has to maintain the registers of all money lenders in their respective areas.
Under the Act, the money lenders should maintain a cash book, a ledger, register of securities and other such account books.
They should not collect interest amount more than the principal amount, the interest rate also should not be more than the maximum rate to be fixed by the government.
The proposed legislation also prohibits the money lenders from taking a promissory note, bond, or any acknowledgement in writing, which does not state the actual amount of loan given.
They also should not realise from the debtor an amount more than twice the amount of the principal.
The state government would prepare an annual report on the administration of the Act, which would be placed before the legislature.
