is any agreement executed in writing ?
2) does it mention rate of interest
3)money lender needs license to advance money on interest
4) if they do not have money lender license they cannot recover the money as no reliefs would be granted by court
Repayment of loan
Parents of a close friend of mine had taken money from a few (apparently non-licensed) money lenders some years back, in order to meet impending medical expenses. I learnt from my friend (who is a 28 year woman) that the lenders have been charging interest at arbitrary rates, sometimes at as high as 15%. This has increased the total payable amount to around 5 lakhs, and consequently, has led to an immense financial burden on the family. As of today, they have completely exhausted ALL their savings. My friend lives away from her parents, and, is a researcher in physics with a monthly income of 35K. Her father is a pensioner earning around 16K. They are paying 15-20K each month in an effort to repay the debt. Her parents do not divulge necessary information to their daughter out of embarassment as a result of which she has to bear most of the debt-burden. She has managed to know that the money lenders number 10-11 and almost all of them are non-licensed. Can you please suggest a possible course of action appropriate to this case?
Asked 9 years ago in Civil Law
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4 Answers
Dear Advocate, What I learnt is the following: 1) None of the lenders carry any license. 2) Stamp paper agreements were executed with 2 out of the 10 lenders. Some sort of agreements were made with the rest of the people, but only on plain paper. 3) The stamp papers do not bear any record of the interest rates. The plain papers vaguely mention some arbitrary rate. Can you please elaborate a bit further? For instance, does a plain paper agreement at all carry any validity for a non licensed lender?
Asked 9 years ago
1) money lender licence is mandatory for carrying out business of money lending
2) even if agreement is done on plain paper it would be binding upon parties
3) however if lender does not have any licence he cannot take out legal proceedings for recovery of loan amount with interest
She has managed to know that the money lenders number 10-11 and almost all of them are non-licensed.
Can you please suggest a possible course of action appropriate to this case?
She should stop repaying the loan interest and talk to the lenders to accept the principal amount in some easy installments owing to the difficulties she is experiencing to manage this amount.
If they dont agree and insist on the interest amount then she can issue a legal notice warning them from indulging in such illegal acts of collecting money at exorbitant interest which is an offence, if they do not listen then you may lodge complaint against them for this offence.
The lenders cannot recover the loan amount on the basis of loan papers they possess.
They are not valid in law until the borrower accepts the liability before court while being examined as a witness.
You may inform your friend to ask her parents to not to accept the liability anytime.