Licence must for arhtiyas in Punjab

Ruchika M Khanna & Rajmeet Singh

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Tribune News Service

Chandigarh, August 23

Moneylenders in Punjab will now have to seek a licence from the state authorities to lend money on interest rates fixed by the government. The Punjab Government also proposes to fix the cash limit on loans given per unit of land by the private lenders, mainly commission agents (arhtiyas).

The arhtiyas are often accused of charging interest as high as 24 per cent per annum while banks charge only 4 per cent on crop loans up to Rs 3 lakh, if repayment is on time. Punjab is plagued with rural indebtedness with farm loans from  institutional sources pegged at Rs 82,000 crore and from arhtiyas at Rs 20,000 crore.     

The decision to regulate non-institutional loans to help debt-trapped farmers was made at a meeting of the Punjab Cabinet on Thursday.

The new provisions have been included as amendments in the Punjab Settlement of Agricultural Indebtedness Act, 2016, which will be tabled in the monsoon session of the Vidhan Sabha that begins on Friday. 

Once these are passed by the House, loans will be deemed as ‘already paid’ to moneylenders in cases where the interest paid by farmers/farm labourers on the loan availed is equal to the principal amount.

Registration of moneylenders is mandatory under the Punjab Money-Lenders Act, 1938.  Official sources say till a few years ago, most moneylenders would apply for a licence, which would be issued by collectors. The Act, valid not only for arhtiyas but also traders lending money privately, provides that any suit for recovery filed by unregistered moneylenders will not be entertained. 

Over the years, the arhtiyas stopped applying for a licence on the plea that they gave money to farmers against crops sold through them, unlike any other non-institutional financial concerns.  

Vishwajeet Khanna, Additional Chief Secretary, Development, told The Tribune that the aim was to regulate private moneylenders and provide quick relief to the ailing farm sector. “A Cabinet sub-committee was formed last year to study the 2016 Act, which made certain recommendations. Moneylenders cannot lend more than the farmers’ paying capacity. 

“We have amended Section 5 of the Punjab Settlement of Agricultural Indebtedness Act, 2016, which paves the way for establishing Debt Settlement Tribunals at the divisional level rather than the district level (as originally proposed in the 2016 Act),” he said.

Regulating farm loans 

• Govt proposes cash limit on loans given per unit of land by private lenders
• Loans will be deemed ‘paid’ where interest paid is equal to the principal amount
• In case of dispute, arhtiyas will submit a promissory note and cheques issued to debtors before the debt settlement forums
• These forums will be chaired by divisional commissioner with a representative each from the Revenue and Agriculture departments