Loans by moneylenders to tribals in scheduled areas to be invalidated: Kamal Nathhttps://indianexpress.com/article/cities/madhya-pradesh-moneylenders-new-law-license-tribals-5892031/

Loans by moneylenders to tribals in scheduled areas to be invalidated: Kamal Nath

Chief Minister Kamal Nath made the announcement while addressing a function organised to mark the International Day of the World's Indigenous Peoples at Chhindwara, which he represents in Assembly. He said in the future, moneylenders will be able to operate only with licences.

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If moneylenders give loans without taking license it will become an illegal act, CM Nath said in Chhindwara.

The Congress government in Madhya Pradesh on Friday said loans given by moneylenders to tribals living in scheduled areas of the state will be invalidated. The moneylenders will have to return land, jewellery or any other valuables pledged by the borrowers, or face consequences.

There are 89 scheduled areas in the state and a tribal population of nearly 1.5 crore. Out of 230 Assembly constituencies in the state, 47 are reserved for tribals. It is a common practice for moneylenders in tribal areas to charge exorbitant rates of interest, which occasionally leads to debtors committing suicide over their inability to repay.

Chief Minister Kamal Nath made the announcement while addressing a function organised to mark the International Day of the World’s Indigenous Peoples at Chhindwara, which he represents in Assembly. He said in the future, moneylenders will be able to operate only with licences.

Sources told The Indian Express that the government will soon bring an ordinance to implement the announcement. The ordinance will propose a jail term of up to three years and a fine of Rs 1 lakh for moneylenders who operate without licence. The ordinance will cap the rate of interest to ensure that borrowers are not exploited.

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Currently, licences in the scheduled areas are regulated by the Madhya Pradesh Anusuchit Janjati Sahukar Viniyam, 1972. Sources said the licences under the norms were issued by sub-divisional officers. A top bureaucrat said the regulation had capped the annual rate of interest at six per cent.

Meanwhile, the government announced a slew of sops for tribals on the occasion.

The government said rightful claims rejected under the Forest Rights Act will be reexamined and the claimants will be given forest rights by launching a campaign.