(1) A money-lender shall,–
(a) maintain a regular account of loan for each debtor separately;
(b) deliver to the debtor every year the prescribed statement of account signed by him or his agent specifying the amount of loan that may be outstanding against such debt or on the prescribed date. Such statement of account shall contain all transactions of loan entered into during that year. The said statement shall be in the language of the village office of the district for which the money-lender has obtained a licence.
(2) The account mentioned in clause (a) of sub-section
(1) shall be so maintained that items of principal and interest may be separately and clearly ascertained and the balance of principal and interest shall be shown separately. The money-lender shall not be authorised to include the interest or any portion of interest in the principal. The opening balance of principal and interest shall be separately shown:
Provided that if after a loan was originally advanced by a money-lender, a widow or minor becomes entitled to such loan, such widow or minor shall not be required to maintain the account and furnish the statement of account under sub- Money lenders to maintain accounts and to furnish statements thereof to debtors.
[Act No.V of 1349 F.] 9 section (1) for a period of one year from the date on which such right accrued.
(3) The licensing authority or any person authorised by him may inspect the books of account of a money-lender for the purpose of satisfying himself that the provisions of this section are being complied with.
8[6. [XXX]]
7. A debtor to whom a statement of account has been furnished under clause (b) of sub-section (1) of section 5, shall not be bound to admit or deny the correctness of such account, and from his mere silence it shall not be presumed that he has admitted the correctness of the account.
8. Every money-lender shall, without delay, pass a receipt for the payment made by a debtor and if payment is made by challan an endorsement shall be made thereon acknowledging receipt thereof.
9. Notwithstanding anything contained in any law for the time being in force, in every suit relating to a loan:
(1) the Court shall frame and decide the issues whether the money-lender is a money-lender as defined in subsection (7) of section 2, and whether he has complied with the provisions of section 3 and of clauses (a) and (b) of subsection (1) of section 5 and sub-sections (1) and (2) of section 6;
(2) if it is proved that the plaintiff is a money-lender as defined in sub-section (7) of section 2, but does not hold a
8. Section 6 omitted by the Telangana Pawn Brokers Act, 2002 (Act No.6 of 2002).
Debtors not bound to admit correctness of accounts.
Receipt for payment of loan.
Procedure of Court in suits for recovery of loans.
10 [Act No.V of 1349 F.]
licence granted under section 3, the Court shall dismiss his suit;
(2-A) if it is proved that the money-lender has not complied with the provisions of clause (a) of sub-section (1) of section 5, or of sub-section (1) of section 6, or of section 8 and the plaintiff‘s claim is established in whole or in part, the Court may, in the circumstances of the case, disallow the whole or any portion of the interest due and may disallow the cost wholly or in part;
(3) if it is proved that the money-lender has not furnished the debtor with a statement of account in accordance with the provisions of clause (b) of sub-section
(1) of section 5 or of sub-section (2) of section 6, the Court shall, in computing the amount of interest, exclude the interest in respect of every period for which the moneylender has not furnished the debtor with the statement of account:
Provided that if the money-lender has, after the prescribed time, furnished the statement of account and the Court is satisfied that there was sufficient cause for not furnishing the statement earlier, the Court may, inspite of such default, include such period or periods for computing the interest.
Explanation:- If a money-lender has maintained his account and delivered the statement of account in the prescribed form and manner, it shall, inspite of any error or omission, be presumed that he has complied with the provisions of clauses (a) and (b) of sub-section (1) of section 5 and of sub-section (1) and (2) of section 6, if the Court is of opinion that such error or omission is accidental or immaterial and that the accounts are maintained in good faith.
[Act No.V of 1349 F.] 11
10. 9[(1) The Government may, from time to time, by notification in the 10Telangana Gazette, fix the maximum rate of interest for any local area or class of business of money lending in respect of secured loans and unsecured loans.
(1-a) No money-lender shall levy charges other than compound interest and expenses mentioned in sub-section
(3) of this section incurred by him in respect of loans.
(1-b) Whoever, being a money-lender, demands or charges or receives from a debtor interest at a rate exceeding the maximum rate fixed by the Government under sub-section (1), shall be punished with imprisonment for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both.]
(2) The parties may include a stipulation in the agreement that if the sum payable as interest is not paid on the date fixed, under the agreement the money-lender may charge simple interest on such sum by way of damages from the date of default until it is paid, at a rate not exceeding half the rate of interest payable on the principal and the interest so charged shall not, for the purposes of this Act, be deemed to be part of the interest charged in respect of the loan.
(3) When property is given by way of security or mortgage nothing in this section shall prevent a moneylender from recovering the expenses incurred for investigating title to the property, the costs of stamp and expenses for registration of document and other expenses incurred which may be reasonable in the opinion of the Court, if the parties have agreed in writing to the levy and payment of such expenses, otherwise only expenses
9. Substituted by Act No.21 of 1978.
10. Substituted by G.O.Ms.No.46, Law (F) Department, dated
01.06.2016.
Computation of interest.
12 [Act No.V of 1349 F.]
leviable under the 11Transfer of Property Act No. I of 1336 F or any other law for the time being in force, shall be allowed.
Explanation:— In cases where the transaction of loan is in kind or loan is in cash and its repayment in kind, or loan in kind and repayment in cash, the amount of principal and interest shall be determined according to the local marketprice of the commodity at the time of taking and repayment of loan.