Mumbai: A technical group formed by the Reserve Bank of India on 24 July mooted a model legislation for regulating money-lending actvities besides, fixing of maximum interest rates and compulsory registration of lenders by state governments.
A 95-page report of the S C Gupta-headed technical group also proposed creation of Accredited Loan Providers (ALP) who would work parallel to moneylenders in providing credit in rural areas to inject competition, thereby regulating interest rates.
Though it provided flexibility to state governments to adjust interest rates according to market realities, the report made it clear that while fixing maximum rates, the range of interest rates and costs and other expenses being charges should be taken into account.
It also provided for alternate dispute mechanisms like Lok Adalat and Nyaya Panchayat for speedy and economical dispensation of justice.
Apart from compulsory registration, the report provided for penalisation of unregistered money lenders. But it favoured a simple and hassle-free procedure for registration and renewal.