The Andhra Pradesh Government decided to enact a new ‘AP Money lending Bill – 2017’ in the next Assembly Session by scrapping old Act. According to new Act, the State Government will decide the interest rates on micro finances to be lended by Money launders. The Money launders have to take licence from the Government for every three years. The licenced Money lenders have to submit accounts of money lending, interest collected there upon every year. The State Cabinet approved this new Bill in it's recent meeting.
If money lenders would dare to collect higher interest, under recording of money lended, harassments on loanees, demanding more charges than interest decided by Government, taking control over properties of loanees, they be punished with string action, the Bill says. To resolve disputes between Money lenders and loanees, separate special courts will be created, the bill stated.
The objective of the new legislation is to bring a controlled regulation by the State in lawful money lending, eradicating abuses and malpractices in the micro finance business and to protect both the Money launders and loanees, particularly to poor BPl women and farmers from higher interest rates.
Earlier, in United Andhra Pradesh, AP Money lenders and Accredited loan Providers Act was enacted on the advice of Reserve Bank of India. As per new act, the money lenders should maintain a daily cash book, a ledger, register of securities and other related account books. They should not levy higher interest charges more than government decided in any condition. The proposed bill further prohibits money lenders from taking a promissory note, bond, or any acknowledgement in writing, which does not reveal the actual amount loaned.
Money lenders are still collecting higher interest in the rural and urban areas of Andhra Pradesh in many shapes after micro finance institutions were closed. Earlier, money lenders, pawn brokers and middle persons are used to charge unbelievable interest from 32% to 225% per annum.