The government plans to bring a strict law to control unregulated lending activities. It has presented a draft of the Ban on Non-Regulated Lending Activities (BULA) bill. The bill proposes up to 10 years imprisonment and heavy fines for violators. The government has invited public opinions on the draft by 13 February 2025.
The bill aims to ban individuals or entities not authorized by the RBI or other regulators from lending money. It also covers loans not governed by any existing law, whether provided digitally or otherwise. However, it exempts loans taken from relatives.
Strict Punishments For Violators
The draft proposes a minimum punishment of two years imprisonment, extendable to seven years. Violators may also face fines between ₹2 lakh and ₹1 crore. It prescribes three to 10 years imprisonment for lenders who harass borrowers or use illegal recovery methods. If the case spans multiple states, the CBI will investigate.
Protecting Borrowers From Predatory Lending
The RBI’s 2021 report on digital lending recommended curbing unregulated loans. It highlighted the need to protect borrowers and regulate rogue lenders. The government has already removed thousands of fraudulent apps linked to extortion and suicides.
Supreme Court lawyer Ashwini Dubey supported the bill, saying it will ban harmful apps. He urged the government to simplify loan processes for the needy. Lawyer Abhishek Rai suggested forming separate courts for speedy trials. He believes the law will effectively control predatory lending and protect borrowers. The government remains committed to enforcing this critical reform.
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