Arrangement of Sections
1. Short title
3. Licenses to be taken out by money-lenders
4. Certificate required for grant of money-lender's license
5. Suspension and forfeiture of money-lender's certificates
6. Names to be stated on documents issued by money-lenders
7. Restrictions on money-lending advertisements
8. Penalties for false statements and representations
9. Form of money-lender's contracts
10. Prohibition of compound interest and provision as to defaults
11. Obligation of money-lender to supply information as to state of loan and copies of documents relating thereto
12. Provisions as to bankruptcy proceedings for money-lender's loans
13. Appropriation of principal and interest
14. Reopening of transactions of money-lenders
15. Interest at a rate exceeding 48 per centum to be deemed harsh and unconscionable
16. Courts to which proceedings on money-lending transactions are to be taken
17. Prohibition of charge for expenses on loans by money-lenders
18. Limitation of time for proceedings in respect of money lent by money-lenders
19. Special provisions as to pawnbrokers' loans
20. Notice and information to be given on assignment of money-lenders' debts
21. Application of Act as respects assignees
to make provision with respect to persons carrying on business as money-lenders; and to provide for matters incidental thereto.
[26th August, 1938]
Act 11 of 1938,
Act 15 of 1952,
Act 36 of 1970,
Act 16 of 1973,
Act 13 of 1994,
GN 279 of 1964,
GN 497 of 1964,
SI 5 of 1965.
This Act may be cited as the Money-lenders Act.
In this Act, unless the context otherwise requires—
“authorised name” and “authorised address” mean respectively the name under which and the address at which a money-lender is authorised by a certificate granted under this Act to carry on business as a money-lender;
“business name” means the name or style under which any business is carried on, whether in partnership or otherwise;
“company” means any body corporate being a money-lender;
“firm” means an unincorporate body of two or more individuals, or one or more individuals and one or more corporations, or two or more corporations, who have entered into partnership with one another with a view to carrying on business for profit;
“interest” does not include any sum lawfully charged in accordance with the provisions of this Act by a money-lender for or on account of costs, charges or expenses, but, save as aforesaid, includes any amount, by whatsoever name called, in excess of the principal, paid or payable to a money-lender in consideration of or otherwise in respect of a loan;
“money-lender” includes every person whose business is that of money-lending or who advertises or announces himself or holds himself out in any way as carrying on that business, but shall not include—
(a) any pawnbroker in respect of business carried on by him in accordance with the provisions of any law for the time being in force in relation to pawnbrokers; or
(b) any body corporate in so far as it is empowered to lend money by any Act or by any British Act; or
(c) any person bona fide carrying on the business of banking or insurance or bona fide carrying on any business not having for its primary object the lending of money, in the course of which and for the purposes whereof he lends money; or
(d) any building society registered under the Building Societies Act; or
(e) any body corporate for the time being exempted under section 2A;
“Permanent Secretary” means the Permanent Secretary, Ministry of Finance;
“principal” means in relation to a loan, the amount actually lent to the borrower.
[S 2 am by Act 15 of 1952; 36 of 1970; GN 279 of 1964; SI 5 of 1965.]
(1) The Minister may, by statutory order, exempt any body corporate from the provisions of this Act, and such exemption may be granted subject to such terms and conditions and in respect of such period as the Minister may specify in the order.
(2) An order under this section may be revoked at any time.
[S 2A am by Act 36 of 1970.]
(1) Except as hereinafter provided, every money-lender, whether carrying on business alone or as a partner of a firm, shall take out annually in respect of every address at which he carries on his business as such, a license (in this Act referred to as “a money-lender's license”) which shall expire on the 31st December in every year, and there shall be charged on every money-lender's license a fee of four hundred and fifty fee units or, if the license be taken out not more than six months before the expiration thereof, three hundred fee units:
Provided that in respect of any address for which one partner in a firm of money-lenders has duly taken out a money-lender's license, every other partner in such firm shall, subject to the provisions of section 4, be issued with a money-lender's license free of charge for such address.
(2) Subject to the provisions of this Act, money-lenders' Licenses shall be in such form as the Minister may direct, and shall be issued by the Permanent Secretary on payment of the license fee, and regulations made by the Minister, by Statutory Instrument, may make provision as to the procedure to be followed in making application for money-lenders' Licenses:
Provided that a money-lender's license shall be taken out by a money-lender in his true name, and shall be void if it be taken out in any other name, but every money-lender's license shall also show the money-lender's authorised name and authorised address.
(3) If any person—
(a) takes out a money-lender's license in any name other than his true name; or
(b) carries on business as a money-lender without having in force a proper money-lender's license authorising him so to do, or, being licensed as a money-lender, carries on business as such in any name other than his authorised name, or at any other place than his authorised address or addresses; or
(c) enters into any agreement in the course of his business as a money-lender with respect to the advance or repayment of money, or takes any security for money, in the course of his business as a money-lender, otherwise than in his authorised name;
he shall be guilty of an offence and shall be liable, on conviction by a subordinate court of the first or second class, to a fine not exceeding three thousand penalty units in respect of each offence:
Provided that on a second or subsequent conviction of any person (other than a company) for an offence under this sub-section, the court may, in lieu of or in addition to ordering the offender to pay the fine aforesaid, order him to be imprisoned for a term not exceeding three months, and an offender being a company shall, on a second or subsequent —conviction, be liable to a fine not exceeding fifteen thousand penalty units.
[S 3 am by GN 279 of 1964; Act 13 of 1994.]
(1) A money-lender's license shall be granted except to a person who holds a certificate granted in accordance with the provisions of this section authorising the grant of the license to that person, and a separate certificate shall be required in respect of every separate license. Any money-lender's license granted in contravention of this section shall be void.
(2) Certificates under this section (in this Act referred to as “certificates”) shall be granted by the subordinate court of the first or second class having jurisdiction in the district in which the money- lender's business is to be carried on.
(3) Every certificate granted to a money-lender shall show his true name and the name under which, and the address at which, he is authorised by the certificate to carry on business as such, and a certificate shall not authorise a money-lender to carry on business at more than one address, or under more than one name, or under any name which includes the word “bank”, or otherwise implies that he carries on banking business, and no certificate shall authorise a money-lender to carry on business under any name except—
(a) his true name; or
(b) the name of a firm in which he is a partner, not being a firm required by the Registration of Business Names Act to be registered; or
(c) a business name, whether of an individual or of a firm in which he is a partner, under which he or the firm has, at the commencement of this Act, been registered for not less than three years under the Registration of Business Names Act.
(4) A certificate shall come into force on the date specified therein, and shall expire on the next following 31st December.
(5) The Minister may, by Statutory Instrument, make regulations with respect to the procedure to be followed in making applications for certificates (including the notices to be given of intention to make such an application), and be given of intention to make such an application), and certificates shall be in such form as may be prescribed by regulations so made.
(6) A certificate shall not be refused except on some one or more of the following grounds—
(a) that satisfactory evidence has not been produced of the good character of the applicant, and, in the case of a company, of the persons responsible for the management thereof;
This section of the article is only available for our subscribers. Please click here to subscribe to a subscription plan to view this part of the article.