Tamil Nadu: Loan sharks can’t seek security for loan up to Rs 10L
Under the new rules, lenders are prohibited from seeking security for household loans up to Rs 4 lakh and for loans up to Rs 10 lakh extended to Self-Help Groups.
Tamil Nadu Government
CHENNAI: The Tamil Nadu government has notified additional rules governing money lending entities, strengthening oversight and specifying fresh compliance norms. Under the new rules, lenders are prohibited from seeking security for household loans up to Rs 4 lakh and for loans up to Rs 10 lakh extended to Self-Help Groups.
The regulations follow the implementation of the Act in June, based on a Bill introduced in the State Assembly by Deputy Chief Minister Udhayanidhi Stalin. The latest set of rules further clarifies procedures, reporting requirements and the powers of the Ombudsperson.
According to the new provisions, every money lending entity must upload an annual statement for each financial year on the designated portal on or before September 30. These records must be maintained for a minimum of eight years. The government has emphasised that digital filing will help ensure better tracking of lending activity and improve transparency across the sector.
The gazette notification also details the powers and functions of the Ombudsperson. It states that every award issued by the Ombudsperson will be treated as a decree of a civil court, giving it legal enforceability. The Ombudsperson must submit an annual report to the government by January 31 each year, documenting the number of complaints received, disposed of and pending.
The rules further specify timelines for handling grievances. The Ombudsperson must issue notice to the opposite party within one week of receiving a complaint and conduct hearings within 30 days. The government has said these time-bound procedures are intended to ensure speedy redress of borrower grievances and prevent delays in dispute resolution.
Revenue officials, including tahsildars and deputy tahsildars, will continue to function as registering officers for money lending entities and are required to maintain registers containing details of all registered lenders and update the information before the fifth of every month. The updated data must also be uploaded onto the portal, enabling regular monitoring by the government.
The notification adds that the combination of stricter documentation, mandatory online reporting and a strengthened grievance redress mechanism is expected to bring greater accountability to the money lending ecosystem. The government has said that these measures aim to safeguard borrowers from exploitative practices while ensuring that lending entities follow standardised procedures in line with the Act.