E-Paper
U.P. set to repeal money-lending law
The govt believes the law has outlived its utility with banks reaching the remotest corners of the state
The Uttar Pradesh Regulation of Money-Lending Act, 1976, will cease to exist in the state very soon. The law department is preparing a bill to repeal the 46-year old law which the government believes has outlived its utility with the penetration of formal banking services in rural areas.
The decision to repeal the law was taken in a meeting chaired by chief secretary Durga Shankar Mishra last month after the department of institutional finance, which was initially opposing the proposal, finally came on board.
“The government has decided to withdraw the UP Regulation of Money-Lending Act after it was found to have lost its relevance in modern times when banking services are easily available to people in villages,” Sudhir Kumar Garg, principal secretary, revenue, confirmed.
“We have communicated the decision to the law department for further necessary legislative action,” he added.
The government, it is learnt, may introduce a bill in the forthcoming monsoon session of the state legislature to repeal the Act.
The Act was brought in 1976 “to provide, in the interest of the general public, for the regulation of money-lending transactions and for the registration of money-lenders.” The Act also provided that a person shall not carry on the business of money-lending, unless he holds a valid certificate of registration and provided for the punishment for violation of provisions including with regard to charging rate of interest.
“There were found to be more than 500 active money-lending licencees in the state when the government decided to end the money-lending Act,” another official said.
The government’s decision to repeal the law came after the Board of Revenue moved a proposal in this regard, arguing that the money-lending law had lost its utility after the availability of formal banking services in rural areas. The deletion of the law, it also argued, would make it easier for the government to act against the money-lenders (Sahukars) for exploiting people.
The department of institutional finance, however, held an opposite view and initially resisted the proposal till it was also brought on the same page after rounds of meetings.
“The institutional finance department was of the view that the network of formal banks was still not that strong in villages because of which private money-lenders continued to play a crucial role in the state’s rural economy by providing instant loans to people to meet their emergency needs,” a Board of Revenue official said.
People aware of the whole issue said that despite the fact that the government had decided to repeal the money-lending law, it was yet not clear how the repeal would serve or promote the interest of the general public. “The government should have done proper homework and consulted stakeholders and experts before taking the final call on repeal,” the official suggested.
