The Upper House on Thursday unanimously endorsed the bill aimed at taking action against loan sharks. With the National Assembly endorsing a bill ‘to amend some other Nepal Acts including Civil Code 2080’, the passage has been cleared for its authentication from the President.
Tabling the bill, Minister for Law, Justice and Parliamentary Affairs, Dhanraj Gurung said that since the period of the ordinance related to usurious lending has expired, the bill had to be brought as an amendment to some other Nepal Acts to provide the justice of the loan shark victims.
Following a series of protests from the loan shark victims, the government on May 3 had issued an ordinance to criminalize usurious lending and provide justice to the victimized borrowers. The government also formed an inquiry commission led by Gauri Bahadur Karki to collect complaints from the victims and study them based on the ordinance. The government and the victims on April 1, had reached an agreement to expedite the process to amend the laws to criminalize unscrupulous lending.
Since the ordinance has to be endorsed by the parliament within 60 days, the government tabled the replacement bill at the National Assembly on June 20 and the national assembly passed the bill on June 30. The replacement bill to the ordinance was supposed to be endorsed from the House of Representatives on July 5. However, as the opposition parties including main opposition CPN(UML) obstructed the parliament against a controversial statement made by Prime Minister Pushpa Kamal Dahal, the bill couldn’t be endorsed.
With the expiry of the ordinance and failure to endorse from the parliament created a legal vacuum in the investigations, the government again tabled the bill at the House of Representatives which endorsed it on July 17. However, National Assembly Chairman Ganesh Prasad Timilsina initially refused to include the bill in the proceedings of the upper house and sought opinion from the Attorney General’s Office.
The bill has taken a significant step by criminalizing the practice of lending money at exorbitant interest rates through unfair transactions. It establishes provisions for imprisonment of up to seven years and imposes fines of up to Rs 70,000 on individuals engaged in such predatory lending practices. This move aims to protect vulnerable borrowers from falling into debt traps and to deter loan sharks from exploiting people in dire financial situations.
In addition to criminalizing predatory lending practices, the bill has defined the forcible transfer of a debtor’s immovable property through threats, violence, or exploitation for debt recovery as an unfair transaction. Furthermore, the bill addresses the issue of exorbitant interest rates by stating that charging interest to the extent that it exceeds the principal amount is punishable.
The commission has opened its office in Janakpur, the capital of Madhes Province, as it will be easier for the victims to share their problems. Most of the loan shark victims are from districts of the Terai region. Of the 24,000 complaints received by the Karki commission, majority are from eight districts of Madhesh and Nawalparasi (Susta West). The commission has settled around 1,800 complaints so far and returned 8 bigha of land to victims from lenders.
