Deputy CM Udhayanidhi tables Bill to protect vulnerable borrowers from coercive loan recovery

CHENNAI: Deputy Chief Minister Udhayanidhi Stalin on Friday introduced a Bill proposing stringent punishment for money-lending entities employing coercive loan recovery practices on economically weaker and vulnerable groups, particularly farmers, women and women self-groups.

According to the Bill, no borrower or any member of their family shall be subjected to coercive action by a money-lending entity or its agents while recovering loans. In cases where a borrower or their family member dies by suicide as a result of harassment by such entities, the firm and its agents will be booked for abetment of suicide. They will be deemed to have committed an offence under Section 108 of the Bharatiya Nyaya Sanhita, 2023.

Udhayanidhi stated that Tamil Nadu has been a pioneer in protecting people from usurious interest rates by regulating the operations of money-lenders and pawnbrokers. The state has already enacted the Tamil Nadu Pawn Brokers Act, 1943, the Tamil Nadu Money-Lenders Act, 1957, and the Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003.

However, in recent times, economically weaker and vulnerable sections – particularly farmers, women, self-help groups, agricultural labourers, workmen, footpath vendors, dairy workers, construction workers and migrant labourers – have often fallen prey to attractive loan offers from money-lending entities, including digital lending platforms. These loans frequently lead people into unsustainable debt, Udhayanidhi noted in the Statement of Objects and Reasons.

"Money-lending entities are resorting to unethical methods of debt recovery from borrowers who are already in financial distress. These actions sometimes drive borrowers to take their own lives, shattering families and disturbing social order," he said.

Hence, the government has considered it necessary to introduce a statutory framework to shield economically weaker and vulnerable groups from the undue hardship caused by coercive recovery methods. Accordingly, the government has decided to enact legislation to safeguard the interests of these sections, he further said.

At the introduction stage of the Bill, AIADMK legislator Agir SS Krishnamurthy stated that the principal opposition party would like to make some suggestions when the Bill is taken up for discussion.