Registered pawnbrokers and moneylenders across the State have decided to approach the High Court against the government’s announcement to discharge private loans lent by them through an ordinance. They argue that it is those not registered with the government who have been harassing the debtors and a distinction needs to be made.
They claim that their business so far has been legal, registered and administered through law and strictly controlled, but they have been “at the receiving end.” While they claim that they bridge the money shortfall among the poorer sections who normally do not seek or get institutional credit for emergencies such as health, death and accidents, the discharge of loans through Debt Relief Bill will drastically affect their business, and in some cases may force shutdown.
“We have sought a legal opinion in the matter and will approach the High Court against such a law next week. Pawnbrokers have invested personal money and have adhered to the legal requirement. How can the government discharge loans that are with us?” Karnataka Pawnbrokers Association Secretary P.M. Manohar Lal told The Hindu after the association’s emergency meeting on Saturday. “In fact, the government should have taken action against those unregistered moneylenders who seek higher rates of interest, take farmers’ land documents or blank cheques and harass them during recovery,” he said, and added that they had been left out of the bill.
Pointing out at the mushrooming of gold loan companies across the State, Anand Kothari, Executive Committee Member, said some gold companies are charging interest in range of 18% to 42 % and the government had not taken any action against them. “We cannot and do not take anything except gold or silver from people who come to pledge. As registered pawnbrokers, we cannot take land related documents,” he added. More than 5,000 pawnbrokers in the State have a turnover of around ₹1,000 crore annually, which is a meagre amount when the total turnover of NBFCs and unregistered money lenders are considered, he said.