Keyword(s):
Debtor, Exorbitant Interest, Karnataka Money Lenders Act, 1961, Loan
STATEMENT OF OBJECTS AND REASONS
I
Act 14 of 2004: It is considered necessary to prohibit the charging of exorbitant
interest by any person, in order to obviate the difficulties experienced by the public
particularly farmere who are falling prey to the people charging exorbitant interest on the
loans. Therefore, it has been decided to prohibit lending money at such an exorbitant
interest and to provide for stringent punishment thereof.
The Bill among other things provides for the following:-
i) prohibition of charging exorbitant interest by a money lender;
ii) penalty for charging exorbitant interest and for molesting or abetting
molestation of any debtor for recovery of loan;
iii) provisions for filling petition to a court by a debtor to seek order recording
satisfaction of loan and interest;
iv) voluntary disclosure by a person charging exorbitant interest by filling a
petition to the court disclosing his intention to charge only the rate fixed 2
by the Government under sectiion 28 of the Karntaka Money Lenders Act,
1961;
v) adjustment of interest
The farmers in the State are in great difficulty and cases of their suicide on the
ground of indebtedness are being reported daily. It is mainly due to severe draught
prevailing in the State for the third successive year.
Since the matter was urgent and as both the Houses of the State Legislature are
not in session, the Karnataka Prohibition of Charging Exorbitant Interest Ordinance,
2003 (Karnataka Ordinance 6 of 2003) was promulgated to achieve the above object.
This Bill seeks to replace the said Ordinance.
Hence the Bill.
(Odbtained from LA Bill No. 14 of 2004 vide File No. SAMVYASHAE 55 SHASANA
2003).
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