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Clarification regarding Money Lenders and their limits in Tamilnadu
24-Apr-2025 (In Criminal Law)
My father has taken a loan of 2 lakhs from a money lender who has no licence before 5 years and they have charged him 5000 per month only on interest and are asking to pay the entire principal amount. Similarly with another person where for 1 lakh they are receiving 3000 rupees as the interest only. As per my knowledge I feel the interest is so high and my father has also suffered paying only interest. Now the money lender is demanding paying nearly 5 lakh for the given 2 lakhs & the same other.
S.Gunasekar Advocate Answer.
Yes, this is illegal. Charging such high interest rates (usury) without a license is against the law in India. Your father has already repaid more than the principal as interest, which is exploitative. You can approach the police or consult a lawyer to take legal action against these moneylenders.
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Adv. S Gunasekar
Chennai | 100+ Answers
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Your father appears to be a victim of unlicensed money lending and usurious interest rates, which are illegal in Tamil Nadu.
Legal Position:
1. Unlicensed Money Lending is punishable under the Tamil Nadu Money-Lenders Act, 1957. Lending without a license is a criminal offence.
2. Charging excessive interest (Rs. 5,000/month on Rs. 2 lakhs = 30% annual interest) is usurious and not legally enforceable.
3. Courts have repeatedly held that only the principal amount can be claimed in such cases, and excess interest demands can be struck down.
Remedies:
File a complaint before the Police Station under Section 4 of the TN Money Lenders Act and for criminal intimidation, if threats are made.
Approach the civil court to seek declaration of the loan as illegal and to stop harassment.
Collect proof of payment of interest and lodge a complaint with the Revenue Divisional Officer (RDO).
You have a strong case to avoid paying illegal amounts. Let me know if you need help with a legal notice or complaint draft.
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Adv. Arjun S
Chennai | 100+ Answers
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Disclaimer: The above query and its response is NOT a legal opinion in any way whatsoever as this is based on the information shared by the person posting the query at lawrato.com and has been responded by one of the Divorce Lawyers at lawrato.com to address the specific facts and details.
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