PESHAWAR: The Khyber Pakhtunkhwa Prohibition of Usurious Loans Bill 2014 aimed at abolishing private money lending in the province could not be passed even more than a year after it was introduced in the provincial assembly and is pending with a committee headed by the finance minister.

The bill was introduced in KP Assembly on May 12, 2015 following the Peshawar High Court direction to do away with practice of private money lending in the province. At that time, Jamaat-i-Islami chief Sirajul Haq was the senior minister for finance, who earlier this year left this post after his election as senator.

A finance department note available with Dawn says that the draft could not get clearance in the legislation process and is still pending with a committee headed by the minister for finance.

Minister promises to look into the matter soon

The law explains usurious loans as, “a rate of interest per annum more than the bank rate.” Sub-section (1) of Section 3 laid downs that no money lender either individually or in group of persons shall carry on or continue to carry on the business of money lending to lend money or advance loan to any person for the purpose of receiving usurious interest thereon. Sub-section (2) says that whoever contravenes the provisions of sub-section 1 shall be punished by imprisonment which may extend to seven years, but shall not be less than three years or a fine of one million rupees or with both. Section 4 proposes the same punishment for abetment to those who intentionally and wilfully abets, engages, assists or aids the money lender to lend money or assist in lending the money.

Also, whoever molests any borrower or debtor, whether on his own behalf or on behalf of anybody else with intention to force such borrower to pay back any loan or debt or any part thereof or any interest thereupon, shall be punished with rigorous imprisonment for a term extending to five years or fine of Rs500,000 or both.

Section 6 states that justice of peace on receipt of complaint regarding money lending for the purpose of interest on above the bank rate from any debtor or such business in violation of this law or molesting any borrower, if satisfied, with a view to preventing any such person from carrying such business or molesting, shall direct the local police to register a case against them for violation of provision of this law.

The law also declares that on its commencement, every obligation of any debtor or borrower to pay usurious interest on debt or such part of interest as remained unpaid over and above bank rate immediately before such commencement shall stand extinguished.

This law, however, does not apply to deposit of money or property at a financial institution or insurance company to earn profit, and also exempt loans floated by the government of Pakistan, advance made by financial institution, cooperative society or provident, pension or gratuity funds.

When contacted, KP finance minister Muzaffar Said expressed his ignorance of being part of any such committee. However, he said that he would look into this matter in coming days.

Published in Dawn, July 18th, 2015

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