UP set to repeal money lending law
The Uttar Pradesh Regulation of Money-Lending Act, 1976 will very soon cease to exist in the state. The legal department is preparing a bill to repeal the 46-year-old law which the government says has lost its usefulness with the penetration of formal banking services in rural areas.
The decision to repeal the law was taken at a meeting chaired by Chief Secretary Durga Shankar Mishra last month after the Department of Institutional Finance, which initially opposed the proposal, finally came on board.
“The government decided to withdraw the UP Money Lending Regulation Act after it was found to have lost its relevance in modern times when banking services are readily available to village dwellers,” confirmed Sudhir Kumar Garg, Principal Secretary, Revenue.
“We have communicated the decision to the legal department for further necessary legislative action,” he added.
The government, we learn, could introduce a bill in the next monsoon session of the state legislature to repeal the law.
The Act was passed in 1976 “to provide, in the interest of the public at large, for the regulation of money lending transactions and the registration of pawnbrokers”. The law also provided that a person should not engage in the business of lending money unless he held a valid registration certificate and provided for penalties for violation of the provisions, particularly with regard to the interest rate.
“It turned out that there were over 500 active money lending licensees in the state when the government decided to end the money lending law,” another said. responsible.
The government’s decision to repeal the law came after the Board of Revenue put forward a proposal in this regard, arguing that the Money Lending Act had lost its usefulness after the availability of formal banking services in rural areas. . Removing the law, he also argued, would make it easier for the government to act against money lenders (Sahukars) for exploiting people.
The Institutional Finance Department, however, had an opposing view and initially resisted the proposal until it was also put on the same page after rounds of meetings.
“The Department of Institutional Finance was of the opinion that the network of formal banks was still not as strong in the villages, due to which private lenders continued to play a crucial role in the rural economy of the state by granting instant loans to people to meet their emergency needs,” a Board of Revenue official said.
People aware of the whole matter said that despite the fact that the government had decided to repeal the Money Lending Act, it was not yet clear how the repeal would serve or promote the interest of the general public. “The government should have done its homework and consulted with stakeholders and experts before making the final decision on repeal,” the official suggested.