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Cash lenders who do not follow the guidelines framed by state legislature for controlling the cash lending activities for the benefit of lenders and borrowers both are called as unlicensed money lenders.

In the opinion of the rules framed by state governments the person or organization concerned in money lending business must apply to the registrar of money lenders for having a license for lending money. All of the rules and provisions provided in the Moneylender Act are to be followed by the approved money lenders. You can also get more information regarding cash lending rules and regulations through the specific sites of various state states. You can also use these websites to verify the legal standing of a bank.

Downsides of going to unlicensed cash lenders

Higher interest rates: An unlicensed person lending money to the people who isn't registered with registrar of moneylenders is also called loan shark in a few nations. Such cash banks typically offer personal loans at un-reasonable terms as they charge very high interest rates from their clients starting from 20% to 1000% every year. Individuals who are unable to get loans from other legal establishments are the primary victim of money lenders who are unregistered.

Duplicity in repayment of loans: As the unregistered funds provider doesn't care for law, he also does not obey the ethical rules as he harasses the borrowers unscrupulously in repaying the debt. Such banks sometimes splash paints and write illegible words on the door of the debtor to bother him. Locking the front door, damaging the debtor's belongings like car and sending horrifying Hell Notes are some examples of the other harassing activities that an unauthorized funds provider can usually do with his debtors.

Threatens the debtors: An unsanctioned funds provider normally also employ some bouncers to continue his illegal business by threatening his debtors and driving them to pay back the loan at the badgering terms whether or not he cannot arrange for that. They pull the youths with good-looking awards instead of harassing acts and illegal recoveries from the debtors.

Other illegal activities of unsanctioned money lenders

Folk concerned in illegal ways of handing out money and recovering it are usually at vigilant search for the police authorities as these are among significant type of offences.

People involved in unsanctioned cash lending can not run away from the legal actions that may be taken against them.

Splashing paint, setting fire, scribbling on walls, sending hell notes and locking gates of the debtors are the activities that are normally done by an unregistered money lender for which he can be prosecuted in the court of law under the money lending rules of the state.

Hectoring activities in collecting debt is also a punishable offence.Compelling to allow the premises for unlicensed money lending activities in lieu of providing funds is another offence in the eyes of law.Opening fake bank accounts in the name of staff of unlicensed funds provider to assist the moving of loans illegally is also illegal.

Advertising and promoting loan sharking activities are also offensive activities.Providing transport facilities to the decamping unregistered funds provider or spying and hectoring for the unlicensed lender are also illegal acts.Doing hectoring activities or giving instructions for these sorts of activities are also punishable offences.

Punishments for unsanctioned money lending activities

The associates of unregistered money lender are punished with a fine ranging from $30,000 to $300,000 together with 12 strokes of cane and jail upto 5 years for their first offence. For repeated offences the associates of unauthorized money banks are responsible to pay fine from $50,000 to $ 500,000 with 12 strokes of cans e and jail upto five years.

In case of conducting persecution activities the first time offender associate of unauthorized lender is liable to pay fine ranging from $5,000 to $50,000 along with six cane strokes and 5 years imprisonment. For repeated offenses a unsanctioned moneylender need to pay $6,000 to $60,000 money fine together with 12 cane strokes and nine year's imprisonment.