The Maharashtra Money Lending (Regulation) Act, which was meant to stop exploitation of farmers at the hands of rogue moneylenders, has been sent back by the central government for the seventh time on August 8. The government is understood to have asked the state to reconsider the Bill because it overlapped with several provisions of various central laws including the Reserve Bank of India Act, Companies Act and Banking Regulation Act.

Following this, the state is now contemplating recalling the Bill and framing a new Bill to send to the Centre for its nod. However, a decision on this regard is expected to be taken by the cabinet in the next few days.

Confirming the development, cooperation secretary Rajgopal Deora said, “The Centre has sent it (the Bill) back, but we have not taken a decision on what has to be done. The cabinet will take a decision on it in the next few days.”

“The problem is with the state government — they never cared to resolve the queries and objections of raised by the Centre. Now the Centre has asked the state to remove the shortcomings and send a new Bill. The state could have ensured that there were no shortcomings or violations in the first place and avoided this,” said Arun Ingle, an activist.

The Bill, which was passed in April 2010 by the state legislature, was intended as one of the solutions against distressed farmers committing suicide after being exploited by the moneylenders, who even carried out acts such as transferring the farmer’s land in lieu of the loan amount.

The Maharashtra Money Lending (Regulation) Act framed by the state provided for a penalty of Rs50,000 and five-year imprisonment for illegal money lending activities. Even licensed moneylenders who do not adhere to the statutory norms invited a penalty of Rs 25,000 and a year’s imprisonment for a first-time offence. If the offence is repeated, the moneylender will have to pay a penalty of Rs 10,000 and be sentenced to two years in prison.

The Act also provided a cap on the interest levied on the principal amount. The present rate of interest for secured loans is 18% and 21% for unsecured loan, but the act provided for a cap12% and 15%, respectively. The new legislation also prevents a money lender from transferring land or agriculture land belonging to the farmers in his name.

Every act framed by state, which is sent to the Central Government, requires an assent from various central ministries. Thereafter, the home ministry sends it for Presidential assent.

Why was it framed?The Bill, which was passed in April 2010 by the state legislature, was intended as one of the solutions against distressed farmers committing suicide after being exploited by the moneylenders, who even carried out acts such as transferring the farmer’s land in lieu of the loan amount.

The Maharashtra Money Lending (Regulation) Act framed by the state provided for a penalty of Rs50,000 and five-year imprisonment for illegal money lending activities.

Even licensed moneylenders who do not adhere to the statutory norms invited a penalty of Rs 25,000 and a year’s imprisonment for a first-time offence. If the offence is repeated, the moneylender will have to pay a penalty of Rs 10,000 and be sentenced to two years in prison.