Traders oppose amendment to Money Lending Act

Amendment will require all traders in Gujarat to have a money lending license

Gujarat government's move to amend the Money Lending Act has brought strong opposition from trading community in the state. The new act makes it mandatory to obtain a license of money lending for all the traders, who take or give goods/money on credit to each other, irrespective of their area of operations.

Gujarat Money Lenders' Act, 2011, which was passed in the state assembly and is yet to be implemented defines every trader lending money or goods, as a money lender. Hence, he would require a license to carry out his routine business operations.

The new act covers all types of lending including credit cycle for goods and money under its definition of loan.

 

"In stead of covering only those traders engaged in money lending, this act covers every trader irrespective of his area of operation. Several groups of traders and local associations have raised objections to this amendment. The amendment is not justified for the trader community and it hampers the spirit of doing business," said an office bearer at Gujarat Chamber of Commerce and Industry (GCCI) - a trade body.

"On behalf of traders, we have represented to the government to look into the matter and repeal the amendment and exempt them from the act," he said.

The amendment made in the act is aimed at curbing money laundering and circulation of unaccounted money. However, most traders find this amendment uncalled for and unjust.

"Several sections of the amended act are totally unjust for trader community and this will create unnecessary hassle. There is a provision under section 56 of the act to exempt a particular group of individuals from the provisions of the act. We are demanding to give this exemption to traders," said Ratibhai Thakkar, president of Ahmedabad Sharaf Mahajan - an association of money lenders and traders in Ahmedabad.

"This act is full of injustice, an example of it is that if a trader is not registered as money lender and if he requires to approach the court to settle his dues with a third party, a court shall not entertain his case and may dismiss the case," added Thakkar.

According to trader sources, the amendment would require all the traders to make regular filings of their transactions. "Already there are a number of forms and filings lined up for every month and quarter. Now, with this new act, the state government wants to put additional burden on the trader community. This should not happen," said a trader in Rajkot.

Industry insiders maintained that even if the amended act becomes effective, the genuine cases of fresh money lending license seekers would not be more than 200 in the entire state.

The state government passed the act in the assembly in 2011, however considering the sensitivity of the matter implementation of the same has been pending.