The Nagaland Pradesh Congress Committee (NPCC) on Sunday demanded that the state government strictly enforce the Nagaland Money Lenders Act, 2005.
The NPCC also demanded action against the money lenders or loan sharks who charge exorbitant interest rates as high as 120% per annum, making a mockery of the Act.
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The PCC’s communications department said many of these money lenders do not even possess the license to carry out money lending business.
“The borrowers, many of whom are victims out of ignorance, must also come forward to file criminal complaint against the unscrupulous money lenders or else their silence will only invite more misery heaped upon by money lenders,” it said.
The PCC said the mushrooming of private money lenders and loan sharks in Nagaland is a cause for serious concern as many people are caught in a “debt trap” leading to loss of properties and disruption of family life, including divorces.
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“This is tearing our social fabric, apart from economic ruin,” it noted.
It said the ignorance on the part of borrowers has also contributed to this vicious cycle of debt trap being laid out by unscrupulous money lenders.
The PCC said the Nagaland Money Lenders Act, 2005 Section 24 stipulates that those engaged in money lending business without a license shall be punishable with imprisonment for a term which may extend to six months or a fine upto Rs 2,500 or both.
Moreover, as per the relevant sub-section of Section 7, no money lander can charge interest at a rate exceeding 3% above the prevailing bank rates of interests on loans and rate of interest will be per annum simple interest on the principal amount of the loan, it said.
The party said it is learnt that the rate of interest charged by some money lenders are as high as 120% per annum, “which is also compounded”.
“Under Section 16, 1) (13), any money lender whether licensed or not who receives interest higher than the rate prescribed under Section 7 or at the rate higher than the rate shown in the accounts shall be punishable with imprisonment for a term which may exceed to one year or with a fine which may extend to Rs 5,000 or both,” the PCC said.