I would like to start a small money lending business in partnership how legally it is supported. Can I lend money on signed pronotes and cheque leaves: should I make any stamp paper agreements. Can I lend money on shop advance agreements, small business loans, unsecured hand loans, mortgage on property etc.. with amount extended from 5 thousand up to 15 lac. Thanks Karthik
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you need to regsiter your self as money lender before starting your money lender business
2) then only can you advance loans from Rs 5000 to Rs 5 lakhs
3) you should enter into stamped loan agreements to protect your self
4) take post dated cheques/ pro notes to recover your loan amount
1. Since you want to start the business in partnership you should execute a registered partnership deed with your partner.
2. Money can be lent on signed pronotes and against cheques and mortgages. If you execute an agreement with the borrower you will have brighter chances of success in legal proceedings for recovery of money lent to them.
1.Without money lending license you cannot start such business either in short scale or in large scale.
2. Such business is permissible only after getting necessary licenses from RBI and SEBI.
3.Seeing the current scenario getting such licenses is really very difficult though there is no harm in trying to get the same.
Hi
1. you have to apply for a license to lend the money to make sure a legal recovery if any loan defaults.
2.you can apply for the license as an individual with the assistant Registrar of co-operative societies of your district.
there is a license fee depending on the amount and how many places of office operating the lending.
3.You can file an application in the prescribed format to the respective Assistant Registrar of Cooperative Societies of your district as provided under section 5, 6, 7(a) of Karnataka Money Lenders Act 1961 and 1965 .
Visit your Registrar office for details of the procedure or engage an expert who does the registration work.
1. First you have to get the partnership deed registered.
2. Then obtain Licence to operate money lending business.
3. After registering as the authorised moneylender, you can enter into stamped paper agreements with your clients and then operate.
4. Regarding the decision to lend money to individual persons or a company, you have to be careful while selecting your prospective clients.
You may please go through the following link:
https://indiancaselaws.files.wordpress.com/2014/04/requirement-of-registration-for-private-money-lending-in-india.pdf
This contains all the knowledge w.r.t. Your query.
Regards
Sir,
You need to have a license to lend the money.
I suggest you to make stamp paper agreements to lend money and Get it prepared by a lawyer.
It is the risk to lend the money on shop advance agreement.
Thanks,
Adv.Niranjan,
Mobile/whatsapp - .
Any person who intends to conduct Money Lending and Pawn Broking business shall obtain license as per the Section 6 & 4 of KARNATAKA MONEY LENDERS AND PAWN BROKERS ACT respectively, renewable every five years. He shall pay the license fee to Government to the extend of Rs.5000/- for M.L. and Rs.2500/- for P.B. for a period of five years.
The licensee is required to remit the Security Deposit to the Government which are as follows depending upon the turnover he has made :-
upto Rs. 1 lakh Rs.5,000/-
from 1-5 lakhs Rs.10,000/-
from 5-10 lakhs Rs.25,000/-
above 10 lakhs Rs.50,000/-
Charging Exorbitant Interest by the Money Lenders is prohibited. As per Government Notification dated 28-9-2003, they shall not charge more than 14% (for secured) and 16% (for unsecured loans).
How you conduct the business is your own strategy and idea, there is no legal binding on it if you have obtained licence.
What are the charges of stamp papers to be used for different amount intended to lend, ex: 20rs stamp paper for up to 2 lakhs etc.. Can you kindly help me with the legal draft for such loan. Should it be bonded with cheques or any other article or recovery mode etc... Can you pls recommend if this license will work for per state or district etc... Can this be converted to NBFC over a period of time Thank you
you can contact any lawyer on this website pay his legal fees and he would draft loan agreement for you
2) money lender licence would be for entire state
3)stamp duty is state subject and varies from state to state
4) you can take post dated cheques for recovery of loan amount
The stamp duty on different issues are actually state subject, the correct applicability can be clarified from the local sub-registrar's office or from any other similar money lender in the local.
You can engage the services of an advocate for drafting the loan agreement who would guide you to draft the same with correct legal terminologies.
This license will be valid through out the state.
It depends on the growth of business and your proposed actions to develop it into a NBFC