Wuok Toud 05 October 2023

Loan given to relative for interest

My granny had some 100grams of gold. After her death My uncle mortgaged it at 10% ROI at a private lender. After many years he was not able to pay and release the gold. Also interest was also getting accumulated. So my father paid the total amount with interest to the lender and released the gold. My father made a e-stamp agreement saying my uncle has mortgaged the gold to him and taken 5lakhs as loan with 1% interest. After paying the loan the gold will be released.The paper is notarized.

My father doesn't have a lender licence, will it be issue.? How to make sure no issues arises.

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6 Replies

T. Kalaiselvan, Advocate (Advocate) 06 October 2023

This will not have any legal implications.

Your father has lent amount on the collateral of the jewels that too at a very low rate of interest, hence this will not attract any penal provisions

Dr. J C Vashista (Advocate ) 06 October 2023

Although money lending without a valid licence under State Money Lending Act is an offence for professional money lenders, however, your father is not involved in the business of money lending and advance money (one time) against collateral security it should not attract penal provisions of the State Money Lending Act.

Real Soul.... (LEGAL) 06 October 2023

Just make an agreement and mention therein that that your uncle is borrowing an amount from your father against security of gold ornaments detailed. Just mention terms of repayment of family loan.

Advocate Bhartesh goyal (advocate) 06 October 2023

Money lending licence is not required if money is lent to one or two person against collateral security.your father can initiate legal proceedings to recover money without having Money Lending Licence.