MONEY
Government puts out draft bill to make unregulated lending a non-bailable offence
- IBJ Bureau
- Dec 20, 2024
The Union government has proposed a new bill to treat unregulated lending as a cognizable and non-bailable offence, with penalties including imprisonment of up to 10 years.
The public is invited to submit feedback on the draft bill, named BULA (Banning of Unregulated Lending Activities), which also includes digital lending, by February 13, 2025.
The draft bill defines “unregulated lending activities” as lending that is not covered by any laws governing regulated lending, whether conducted digitally or through other means.
“An Act to provide for a comprehensive mechanism to ban the unregulated lending activities other than lending to relative(s) and to protect the interest of borrowers,” the description says.
The bill defines ‘public lending activity’ as business of financing by any person whether by way of making loans or advances or otherwise of any activity other than its own at an interest, in cash or kind but does not include loans and advances given to relative(s).
Essentially, the bill aims to prohibit individuals or entities not authorised by the Reserve Bank of India (RBI) or other regulators, and those not registered under any other relevant law from engaging in public lending.
Violations of this proposed law would be considered cognisable and non-bailable offences subject to both fines and imprisonment.
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