Even as the police action against usurious moneylenders continues and the government is contemplating new laws, an existing stringent law is yet to be properly enforced. The offences against the usurers are slapped often under the Money Lending Act for charging interest rate exceeding 2 per cent above the maximum rate of interest fixed by commercial banks on loans.
It is being pointed out that the Kerala Prohibition of Charging Exorbitant Interest Act, 2012, which contains stringent provisions against illegal moneylenders has not been fully implemented. The Act prescribes three-year imprisonment and fine of Rs.5,000 for charging exorbitant interests. That apart, it also stipulates that in the case a borrower commits suicide due to harassment by moneylenders; it would entail five-year imprisonment and fine of Rs. 50,000.
Harassment of borrowers by moneylenders has been made an offence, attracting a one-year- imprisonment and fine of Rs.10, 000.
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High Court Lawyer and legal commentator Kaleeswaram Raj said this statute “suffers from a double-sided execution failure”.
The police had not been effectively implementing it and the people also could not effectively use it.
According to Section 4 of the Act, levy of exorbitant interest is an offence that empowers the police to arrest a culprit without a warrant. The offence was a non-bailable one. But “a law which was not implemented is no law at all from the people’s point of view,” he said.
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Mr. Raj said “without registration and effective prosecution, the intended result [of the Act] cannot be achieved. A meaningful legislation cannot remain a non-starter. That will cost the State too much, as sadly illustrated recently”.
As per the Act, debtors could approach the court by disclosing the amount received and the true facts regarding discharge. This would enable a competent court to ensure a fair deal between the parties.
Misappropriations could be set right and restoration of properties could be ordered. But due to lack of awareness “not only the laymen but even lawmen seldom resort to sections 5 and 6 of the Act” which stipulates such remedial measures, he said.
Section 7 of the Act has provided for voluntary disclosure by the creditors, coupled with a willingness to correct him regarding the terms of the loan.
This would exonerate such creditors from the penal consequences. However, the creditor had hardly used this provision.
Despite these provisions, the number of cases registered under this Act was few, Mr. Raj said.