Money Lender License
Money Lender License
A money lender is someone who lends small amounts of money at a higher rate of interest. The reason for charging higher rates of interest is that the money lender faces a higher risk of default than normal banks due to various reasons. People who are desperately in need of money but at the same time do not have a bank account, people with bad credit histories and those who can’t get money from friends or relatives approach a money lender for credit facilities. In India, money lenders are governed by the Money Lenders Act in different states. The Tamil Nadu Government controls the money lending process in accordance with the Money Lenders Act, 1957. It is mandatory for every money lender to have a license. In this article, we look at the procedure for obtaining money lender license.
Factors to issue a license
Money lender license is usually granted by the Revenue Department within 3 to 4 months from the date of submission of the application form. Once the application is received, it is valid for one year. However, there are a few factors that have to be taken into consideration while issuing/renewal/endorsement of a license:
- Whether the person has the competency to run a money lending business.
- Whether the applicant’s premise is an apt place to run the business.
- Whether granting the permission would be against the public interest.
The following documents are required to obtain the money lending license.
- Form A application form.
- Passport size photographs.
- Three specimen signatures mentioning the money lenders name or his nominee.
How to Apply
The following steps have to be followed to obtain a money lending license.
Step 1: Visit the Tahsildar Office
The applicant has to visit the nearest Tahasildar office
Step 2: Receive the application
The applicant has to pay a fee of Rs. 100 to receive the application form from the Tahasildar.
Step 3: Enter the details
The applicant has to enter the required details in the application form.
Step 4: Submission of the form
The form has to be submitted to the Tahasildar’s office.