SAHAKARA SINDHU
Department Of Cooperation, Government of Karnataka

KARNATAKA MONEY LENDERS AND PAWN BROKERS ACT

      The Karnataka Money Lenders Act 1961 and Karnataka Pawn Brokers Act 1961 came into effect from 29-3-1962 with a view to regulate the Money Lending and Pawn Broking Business in Karnataka State. The Karnataka Money Lenders Rules, 1965 have been framed and came into effect from 23-3-1965. Similarly Karnataka Pawn Brokers Rules 1966 come into effect from 19-7-1966.

      Any person who intends to conduct Money Lending and Pawn Broking business shall obtain license as per the Section 6 & 4 of the said Acts 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).

Sl. No	In the State	2010 - 2011
1	Number of Licensed Money Lenders	2744
2	Number of Licensed Pawn Brokers	8146
3	Number of Finance Corporations	7727
4	Number of Fresh Licenses Obtained	1514
5	Number of Licenses Cancelled	425
6	Amount of ML/PB Fees Submited to the Government	387.67
7	Deposit Collected from Money Lenders & Pawn Brokers	2899.143
8	Deposits Refunded	42.65