SAHAKARA SINDHU
Department Of Cooperation, Government of Karnataka

 

KARNATAKA MONEY LENDERS AND PAWN BROKERS ACT 1961 AND RULES 1965

1) Who are Money Lenders?

    According to the Karnataka Money Lenders Act, 1961.

     i)     an individual

    ii)      an undivided Hindu family; or

    iii)    a company; or

    iv)    an incorporated body of individuals;

    who or which carries the business of Money Lending in the State are called Moneylenders.

2) What are the rules and regulations to obtain licence for conducting money lending business?

         Any person who intends to carry the money lending business shall file an application in the prescribed format to the respective jurisdictional     Assistant     Registrar of Cooperative Societies as provided under section 5, 6, 7(a) of Karnataka Money Lenders Act 1961 by paying the prescribed     licence fee and security deposit at the following rates.

M.L. Licence fee for five years term

a)

If the place at which the business of Money lending is to be carried on is not more than one.

` 5,000/- (Five Thousand Rupees only) for the principal  place of business

b)

If the business of Money lending is to be carried on at more than one place within the limits of the area of the Registrar.

` 2,500/- (Two Thousand Five hundred Rupees only) for each of the other places in the area.

NOTE:- Where an application is made after the expiry of the period prescribed by rules in respect of such application, it shall be accompanied by licence fee at double the rates (Applicable to renewal of M.L. licences only).

SECRUITY DEPOSIT AS PER 7(A) OF THE M.L.ACT 

                     Every Money Lender applying for grant of licence shall pay the security deposit as mentioned below:-

1)

A licensee who (invests) less than one lakh rupees in a year

` 5,000/- (Five Thousand rupees)

 

2)

A licensee who (invests) one lakh rupees and above and less than five lakh rupees in a year.

` 10,000/- (Ten Thousand rupees)

 

3)

A licensee who (invests) five lakh rupees and above but less than ten lakh rupees in a year

` 25,000/- (Twenty Five Thousand rupees)

 

4)

A licensee who (invests) ten lakh rupees and above in a year

` 50,000/- (Fifty Thousand rupees)

 

  3) What is the duration of Money Lending licence?

        The duration of the MONEY LENDING  licence is FIVE YEARS.

4) What is the rate of interest charging by the Money Lenders?

       As per the Notification No.CMW/04/CML/2003, dated 28-8-2003 of Karnataka Government, themaximum rate of interest fixed for all     classes of business of Money Lending in the following rates:

     a)  Secured Loans...............14% per annum

     b)    Unsecured Loans...........16% per annum

5) What action can be taken against the Money Lenders for the offences and also charged Exorbitant rate of interest?

     As per the Money Lenders Act 1961 of section 39, Money Lenders who fails to comply with or acts in contravention of any provision of this Act, he     may be punished with fine or imprisonment or both.

     As per the Karnataka Prohibition of charging of EXORBITANT INTEREST ACT 2004, any money lender who charges interest more than that fixed     by the State Government, shall be punishable with imprisonment for a term which may extend to three years and also with fine which may extend to     thirty thousand rupees.

6) Which are the books of accounts required to be maintained by the Money Lenders?

     The books of accounts to be maintained by the Money Lenders are as below;

    i)    Cash book in Form No.4 and 4-A

    ii)      Ledger book in Form No.5 and 5-A

    iii)     Statement showing the details of conditions of the loan in Form No.6.

    iv)     Annual Statement of Accounts in Form No.7

    v)      Pass book in Form No.8 and 9

    vi)     Notices to the debtors in Form No.12.

Karnataka Pawn Brokers Act 1961 and Rules 1966

1)  Who are Pawn Brokers?

      Advancing of loans on pledging of golden jewels, other kinds of valuable articles and movable assets is called pawn broking.

2)  What are the rules and regulations to obtain licence for conducting pawn broking business?

     Any person who intends to carry the Pawn-Broking business shall file an application in the prescribed format to the respective jurisdictional Assistant      Registrar of Cooperative Societies as under section 3, 4 and 4A and Rule (5) of Karnataka Pawn Brokers Act 1961 by paying the prescribed licence     fee and security deposit at the following rates.

  Pawn Broker Licence fee for five years term

a)

If the place at which the business of Money lending is to be carried on is not more than one.

Rs. 2,500/- (Two Thousand Five hundred Rupees only)

 

(b)

If the place at which the business is to be carried on at more than one place.

Rs. 2,500/- (Two Thousand Five hundred Rupees only) for the principal place of the business and Rs. 1,250/- (One thousand two hundred & fifty Rupees only) for each of the other places.

  NOTE:-

    1)      Any person who intends to take Pawn broking licence must obtain money lenders licence also as per section 4(2)C Karnataka Pawn brokers Act 1961 .

    2)    Where an application is made after the expiry of the period prescribed by rules in respect of such application, it shall be accompanied by licence fee at double the rates (applicable to renewal cases only).

 SECRUITY DEPOSIT AS PER 4(A) OF THE P.B.ACT

            Every Pawn Broker applying for grant of licence shall pay the security deposit as mentioned below:-

1)

A licensee who (invests) less than one lakh rupees in a year

` 5,000/- (Five Thousand rupees)

 

2)

A licensee who (invests) one lakh rupees and above and less than five lakh rupees in a year.

` 10,000/- (Ten Thousand rupees)

 

3)

A licensee who (invests) five lakh rupees and above but less than ten lakh rupees in a year

` 25,000/- (Twenty Five Thousand rupees)

 

4)

A licensee who (invests) ten lakh rupees and above in a year

` 50,000/- (Fifty Thousand rupees)

 

3) What is the duration of Pawn Broking licence?

    The duration of the Pawn Broking  licence is FIVE YEARS along with Money Lending licence.

4) What is the rate of interest charging by the Money Lenders?

    As per the Notification No.CMW/04/CML/2003, dated 28-8-2003 of Karnataka Government, the maximum rate of interest fixed for all classes of     business of Money Lending in the following rates:

      a)    Secured Loans...............14% per annum

5) What action can be taken against the Pawn Brokers for the offences and also charging Exorbitant rate of interest?

       As pr the Karnataka Pawn Brokers Act 1961 of section 15, 16, 16A, 17 and 20 who fails to comply with or acts in contravention of any provision of     this Act, he may be punished with fine or imprisonment or both.

     As per the Karnataka Prohibition of charging of  EXORBITANT INTEREST ACT 2004, any moneylender who charges interest more than that fixed     by the State Government, shall be punishable with imprisonment for a term which may extend to three years and also with fine which may extend to     thirty thousand rupees.

 6) Which are the books of accounts required to be maintained by the Pawn Brokers?

     Mainly there are the books to be maintained by the Pawn Brokers.

     a.     Pledge book in Form No.E

     b.     Pawn Ticket in Form No.F

     c.      Sale book of pledges in Form No.G

    d.     Receipt on redemption of pledge in Form No.H

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