WEB DESK
The Sindh Assembly has passed into law a bill prohibiting the business and practices of private money-lending and advancing loans and transactions based on interest.
The Sindh Prohibition of Interest on Private Loans Act, 2023 envisages a 10-year jail term and a fine of Rs1 million for those indulging in these practices.
The preamble of the Bill states: “Injunctions of Islam as laid down in the Holy Quran and Sunnah have explicitly and unequivocally prohibited charging interest on loans and have declared war against those who.”
It further states that it is expedient to make a comprehensive legislation on the subject, for covering all the aspects of the mischief of private money lending by prohibiting the business and practices of private money lending and advancing loans and transactions in Sindh, and to provide for matters ancillary thereto.
Definition of ‘interest’
As per the law, interest includes any amount, big or small, over the principal, in a contract of loan or debt, regardless of whether the loan is taken for purpose of consumption or for some production activity, whether the same is charged or sought to be recovered specifically by way of interest or otherwise, or found so to be recoverable by a competent court.
Prohibition of interest on cars
Section 3(1) of the newly enacted law prohibits that no money lender, either individually or in a group of persons, shall lend money for cars or any other purpose or advance loan to any person for the purpose of receiving interest thereon, nor shall carry on an interest-based transaction in Sindh.
Penalties
Whoever contravenes these provisions, either directly or indirectly, shall be punished with imprisonment of either description which may extend to 10 years, but shall not be less than three years, and shall also be liable to fine not exceeding Rs1 million.
The same penalty applies to those who intentionally and willfully abet, engage, assist or aid the money lender.
Complaint resolution
The Bill states that a ‘Justice of Peace’ shall, within three days on the receipt of any application or complaint regarding the commission of an offense, order the local police to register a case against the person or group of persons.
While, no court less than a judicial magistrate of the First Class shall try an offense under this law.
Recoveries
If the penalty imposed on a money lender, or the amount ordered to be returned is not paid, the court may order recovery of the amount by selling the assets belonging to such a person.
