How to get a Money Lender License in Rajasthan?

A money lender is someone who lends small amounts of money at a higher rate of interest. The reason for charging higher rates of interest is that the money lender faces a higher risk of default than normal banks due to various reasons. People who are desperately in need of money but at the same time do not have a bank account, people with bad credit histories and those who can’t get money from friends or relatives approach a money lender for credit facilities. In India, money lenders are governed by the Money Lenders Act in different states. The Rajasthan Government controls the money lending process in accordance with the Money Lenders Act, 1957.  It is mandatory for every money lender to have a license. In this article, we look at the procedure for obtaining money lender license.

Who is a Money Lender?

 ‘Money-lender’ means-

• an individual or
• an undivided Hindu family, or
• a company (not being a banking company as defined in section 5 of the Banking Regulation Act, 1949), body or institution other than such of them as may, by notification in the Official Gazette, be exempted from the provisions of this Act by the State Government on being satisfied that it is necessary or expedient so to do in public interest, or]
• an un-incorporated body of individuals,

who or which,-

• carries on the business of money-lending in the State; or
• supplies, as a trader or dealer, goods other than agricultural goods on credit on condition of payment of interest by the buyer at a rate higher than that prescribed in section 29 in case the payment of sale price is not made within the stipulated period; or]
• has his or its principal place of such business in the State;

Conditions to issue a Money Lender license in Rajasthan

Money lender license is usually granted by the Revenue Department within 3 to 4 months from the date of submission of the application form. Once the application is received, it is valid for one year. However, there are a few factors that have to be taken into consideration while issuing/renewal/endorsement of a license:

• Whether the person has the competency to run a money lending business.
• Whether the applicant’s premise is an apt place to run the business.
• Whether granting the permission would be against the public interest.

What are the requirements for starting money Lender Business in Rajasthan?

For commencing the business of a money lender in Rajasthan, the following requirements have to be satisfied by the applicant:

• Fit and Proper Person
• No Disqualifications
• Proper Firm Name
• Premises
• Stakeholder or Public Interest

Documents requirement for Money Lender License in Rajasthan

• Application form.
• Identity proof.
• Ration Card
• Bank account details
• Address of the shop or business (proof of address)
• Fees paid details (Challan and details)
• Education details
• Residential Proof: Residential Certificate issued by Local administration office/ Aadhaar card / Passport / Driving License / Ration Card / Govt. Id card / Defence ID Card / PAN Card.
• Age proof (birth certificate / school certificate)
• Applicant passport size photograph.
• Aadhaar card
• Affix stamp as advised by authorities if required.

Important Note:

1. All original and copy of original with self attestation as advised by respective authorities to be submitted as per requirement.
2. Apart from the above documents authorities may ask to submit additional information or documents. Please provide them for processing.

Procedure to apply for Money Lending License

Those who wanted to start a money lending business should have to apply for a money lender licence to carry on business of money lending as follows:

Step 1: Visit the Tahsildar Office : The applicant has to visit the nearest Tahasildar office

Step 2: Receive the application : The applicant has to pay a fee of Rs. 100 to receive the application form from the Tahasildar.

Step 3: Enter the details : The applicant has to enter the required details in the application form.

Step 4: Submission of the form : The form has to be submitted to the Tahasildar’s office.

Conclusion

There are a lot of advantages in starting the business of money lender license in Rajasthan. While some of these advantages provide viable business structure and international opportunities to the applicant, the main objective of setting up this business is to carry out financing activities for individual and commercial businesses. While there are specific disadvantages of starting a money lender license in Rajasthan, the advantages of starting this business outweigh the disadvantages.

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