you need a money lender licence to lend money on interest
2) enter into loan agreement with the bororower
3) agreement should mention period of loan , interest payable on the loan
4)collect post dated cheques for the repayment loan amount
About small personal finance business/service
I am thinking to start side business , personal finance, which monthly turn over will be 1 to 1.5 lack, i m thinking to fianace a person maximum amount 10000 in thier emegancy situation, hosital bill, urgent credit payment, rent due etc (like payday loan ) i will colect cheque and id proof, residens proof, local resident proof , bank statment etc, my main question is if customer fail to repayment i want to forward to third party ( vasooli company etc ) , what will be correct document and paper i shoul have to collect from customer to do so
Asked 7 years ago in Business Law
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3 Answers
This business is illegal to say the least.
No person without the money lending license from the RBI can led money to people.
So you can carry such business but that would be illegal and if complained agaisnt you would be presecuted.
So decide accordingly.
Firstly you should register your firm as a financial institution for carrying out licensed financial transactions. You can engage the services of some agency to act as your collection agents.
The promissory notes and post dated cheques, I'd proofs should be some reliable and essential documents that can be secured
