Iam going to start a daily thandal finance . main operation of my business is lending money and collecting money as EDI(Equated daily instalment) on daily basis.
iam going to register my business under tamilnadu money lending act. is this licence is ok to run my business legally
A Private Finance Company (or PF company for short) is an organization that provides unsecured loans to individuals at an interest rate that is usually higher than what banks charge.
A PF company usually charges a higher interest rate because their loans are unsecured, i.e. there is no collateral involved.
As is the case with all major businesses, money-lending endeavours cannot be pursued without possessing a license for this purpose.
Debtors under this provision could be charged with a rate of interest which doesn’t exceed the rate specified by the Government (which is subject to subsequent changes). The rate of interest fixed by the Government will be correlated to the current bank rates of lending as may be determined by the Reserve Bank of India.
Money-lenders, whether or not licensed, shall not render an amount to the debtor which is less than the ones specified in the accounts, registers or other documents connected with the loan. On the same note, they shall not be in receipt of an interest which is higher than what is depicted in the records. Any non-compliance with this obligation will result in imprisonment for a period of at least three months, though not for more than six months. The imprisonment could be coupled with a fine, which could be as high as Rs. 1,000. Money-lenders committing this offence will have their licenses cancelled.
The money lending act nowhere authorises the daily finance as desired by you, hence which is not provided in the law may be considered as illegal.
