THE amended Moneylending Act, which received parliamentary approval recently, should help to protect those who make use of such services to borrow money.
The Act was amended following complaints about the tactics used by some lenders to recover their loans from borrowers and which had created such adverse public reaction that the authorities were forced to act to protect the consumers.
There were two main bones that the public had to pick with some of the black sheep of the industry, the first being the rough tactics by them and the other the exorbitant interest rates charged by them.
The heavy-handed methods used have been well documented and what caused public revulsion was that the lenders did not merely go directly for the borrowers but their family members as well.
It was the harassment of the family members and the attempt to take the law into their own hands in forcing repayments that warranted the police to step in to prevent physical harm from being done to innocent family members of the borrowers.
However, the victims must first make police reports before the law can step in but quite often the innocent family members have suffered great hardship and harassment at the hands of the enforcers hired by the loan sharks.
These loan sharks are giving the industry a bad name and no doubt the law-abiding ones will be happy with the amendments if they could help to restore some semblance of order to their legitimate activities.
Perhaps the best news is that the new legislation will fix the interest rates on such loans, which is the other serious complaint against the lenders.
At present, the rates are fixed arbitrarily by the lenders and can come to a few per cent daily making it impossible for the borrowers to repay their loans.
Under this arrangement, the original sum borrowed can balloon by several times and the borrowers will be hard put to just keep up with their interest payments.
The new Act will fix the annual interest for collateral loans at 12% while those of non-collateral ones it would not exceed 18% per annum.
The Act will also provide the Housing and Local Government Ministry greater control of the activities of the moneylenders.
The minister can appoint a Registrar of Moneylending who will control, monitor and enforce such lending activities. The amended Act will have power to penalise those who flout the law.
The best news must be that those who use threats and cause injuries to borrowers and public officers are liable to be jailed for up to two years and be caned.
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