The Hindu : Tamil Nadu / Chennai News : Financier held on usury charges

Online edition of India's National Newspaper
Saturday, Aug 19, 2006

Tamil Nadu

Tamil Nadu - Chennai

Financier held on usury charges

Staff Reporter

For 80 lakh lent, he charged 42% a year "Financial institutions other than banks shall charge 9 % for secured loans and 12% for unsecured loans"

CHENNAI : The City Crime Branch police arrested a man on Thursday on charges of collecting exorbitant rates for lending money.

Police said Sikkandar Basha, who runs a travel agency in Anna Salai, had approached financier Mohankumar of Choolai and borrowed Rs 80 lakh between Feb 2003 and June 2006 at the rate of 42 per cent per annum.

Basha claimed to have repaid the loan in instalments and as a one-time final settlement paid Rs 42 lakh cash and Rs 50,000 by cheque. However, Mohankumar deposited a cheque for Rs eight lakh, which he had not returned to Basha at the time of settlement, which bounced.

Basha filed a complaint with the Commissioner of Police who directed the Crime Branch to investigate the case.

According to a police press note issued here, a special team led by DCP Satyanarayana seized several documents from Mohankumar, which he had not returned to Basha. After registering a case, he was detained.

The press note said that as per RBI guidelines, financial institutions other than banks (non-banking finance companies) shall charge 9 per cent for secured loans and 12 per cent for unsecured loans. Higher rates would result in punishment under the TN Prohibition of Exorbitant Act 2003, the note said.

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