A money lender is someone who lends small amounts of money at a higher rate of interest. The reason for charging higher rates of interest is that the money lender faces a higher risk of default than normal banks due to various reasons. People who are desperately in need of money but at the same time do not have a bank account, people with bad credit histories and those who can’t get money from friends or relatives approach a money lender for credit facilities. In India, money lenders are governed by the Money Lenders Act in different states. It is mandatory for every money lender to have a license. In this article, we look at the procedure for obtaining money lender license.

Factors to issue a license

Money lender license is usually granted by the Revenue Department within 3 to 4 months from the date of submission of the application form. Once the application is received, it is valid for one year. However, there are a few factors that have to be taken into consideration while issuing/renewal/endorsement of a license:

• Whether the person has the competency to run a money lending business.
• Whether the applicant’s premise is an apt place to run the business.
• Whether granting the permission would be against the public interest.

Documents Required

The following documents are required to obtain the money lending license.

• Form A application form.
• Passport size photographs.
• Three specimen signatures mentioning the money lenders name or his nominee.

How to Apply

The following steps have to be followed to obtain a money lending license.

Step 1: Visit the Tahsildar Office

The applicant has to visit the nearest Tahasildar office

Step 2: Receive the application

The applicant has to pay a fee of Rs. 100 to receive the application form from the Tahasildar.

Step 3: Enter the details

The applicant has to enter the required details in the application form.

Step 4: Submission of the form

The form has to be submitted to the Tahasildar’s office.