The State government on Thursday fixed 18% as the maximum rate of interest that could be charged by moneylenders.
Finance Minister T.M. Thomas Isaac said the government had set the benchmark for interest on private loans to insulate the public from the trespasses of loan sharks who charged exorbitant interest from borrowers under exploitative terms of mortgage. Unchecked moneylenders had spawned crime and often driven debtors and their families to suicide.
The Kerala Money Lenders Act, 1958, permitted moneylenders to charge interest on any loan at a rate exceeding 2% above the maximum rate of interest charged by commercial banks on credit of the same business nature.
Commercial banks charged 10% to 12% per annum interest on gold loans. Some levied up to 24% interest on personal loans. Hence, the government found there was no effective mechanism to regulate imposition of interest by moneylenders. Dr. Isaac also proposed in the budget that disbursal of loan of ₹20,000 and above should be mandatorily through cheques. to ensure transparency in transactions.
Modernisation
Dr. Isaac has earmarked ₹193 crore to modernise the police and vigilance departments.
The State is due to receive an annual grant of ₹60 crore from the Centre to upgrade law enforcement.
The Finance Minister has set aside ₹16 crore for the renovation of jails, ₹75 crore to modernise the Fire and Rescue Services Department and ₹24 crore to upgrade the infrastructure of courts.
Legal metrology
The Legal Metrology Department has received an allocation of ₹11 crore.