Money Lender Acts Prohibts from doing Money Lending Business without Licence. As per the act one can not give LOAN unless he is registered for the same under the Authority. LOAN for this purpose Means...
As per The section 2 (VII) of Chhattisgarh Money Lenders Act
"loan" means an actual advance made within twelve years from the date of the last transaction whether of money or in kind at interest and shall include any transaction, which the Court finds to be in substance a loan, but it shall not include -
(a).......
(b).......
(c).......
(d)
(e) an advance made on the basis of a negotiable instrument, as defined in the Negotiable Instruments Act, 1881 (XXVI of 1881), other than a promissory note,
From the above it clearly means that one Can give Loan/Advances against the Cheque and it will not fall under the perview of Money Lender Act as Loan Given and therefore will Not require any Licence.
What if somebody is giving Money against cheque on quite regular basis and Taking interets to the tune of 25 % Per Annum through Banking system and also showing his entire Interest income under Income from other sources in Income Tax Returns.
Is it legally allowed ? The Money Lenders act Perhaps does not prohibits to charge interest on Advance advance made on the basis of a negotiable instrument (Like Cheque)
Thanks
