Money Lending and License under KMLA, 1958
If proper precautions are made, Money lending is flourishing business. It’s a process in which, money is lend against a security. Security may be land, building, gold, guarantee etc. Among these, gold loan offers a distinct advantage to the money lender, because in this situation the money lender is in possession of the security itself i.e. gold.
Money lending business is subject to strict regulations, and adherence with applicable laws are necessary. One of the pre-requisite for conducting money lending business is the license for carrying money lending business under respective state law. Once issued, the money lender shall comply with regulations of the act.
This article is primarily meant for obtaining license under Kerala Money Lenders Act 1958 (However, readers from other jurisdiction may also express their views and queries, since the provisions are almost similar to the money lenders act of respective states)
Salient features of Kerala Money Lenders Act, 1958
- Where a money-lender has more than one shop or place of business, whether in the same town or village or in different towns or, villages he shall obtain a separate license in respect of each shop or place of business.
- No money-lender shall charge interest on any loan at a rate exceeding two per cent above the maximum rate of interest charged by commercial banks on loans granted by them:
What is the fees for obtaining license under Kerala money lenders act
Fees for obtaining license under Kerala money lenders act is Rs.6000/-
Is there any security has to be deposited to obtain license
Yes, security has to be deposited in govt treasury to obtain the license. Security amount varies based on the amount lend as follows
- A licensee who lends less than one lakh rupees in an year – Five thousand rupees
- A licensee who lends one lakh rupees or above but less than five lakh rupees in an year – Ten thousand rupees
- A licensee who lends five lakh rupees or above but less than ten lakh rupees in an year – Fifty thousand rupees
- A licensee who lends ten lakh rupees or above, but less than twenty-five lakh rupees in an year – One lakh rupees
- A licensee who lends twenty-five lakh rupees or above, but less than fifty lakh rupees in an year – One lakh and fifty thousand rupees
- A licensee who lends fifty lakh rupees or above, in an year – Two lakh rupees
What is the validity of money lenders license
License under Kerala money lenders license is valid for one year, which can be renewed year-to-year
When to apply for a license under money lenders act
License shall be obtained prior to the commencement of lending business
Is separate license is required for branches
Yes, Where a money-lender has more than one shop or place of business, whether in the same town or village or in different towns or, villages he shall obtain a separate license in respect of each shop or place of business.
What is the procedure for obtaining license under Kerala Money Lenders Act, 1958
- Submit a request letter and license fee to the commissioner of commercial tax
- Deposit security amount in govt treasury in challan 38
- Register and login to http://keralataxes.gov.in/
- Submit application online with required documents
- Printout the application and affix the photo of the applicant and submit the hard copy to the commissioner with required documents such as nativity certificate, rent agreement, conduct certificate etc.
If you need assistance in obtaining license under money lenders act, contact the author or comment below.
