Archive · 16 Jun 2025
Tamil Nadu Enacts Law Against Coercive Money Lending
The Tamil Nadu government has created a new law to stop money lenders from using harsh tactics to collect small loans.
This law, which got approved in June, protects people like farmers and women from being treated badly.
The law says money lenders can't threaten or harass borrowers.
It applies to most money lenders in the state, but not banks and certain financial companies.
The law also requires all loan information to be in Tamil.
This is to help people understand their loans and prevent unfair treatment.
Tamil Nadu government notified a law to prevent coercive recovery actions by money lending entities.
The Act aims to protect economically weaker sections from harsh recovery methods.
The law applies to all money lending entities in TN, excluding registered banks and NBFCs.
The Act defines 'coercive action' and mandates Tamil language in all borrower communications.
The Act received the Governor’s assent on June 9 and was published on June 16, 2025.
- Who
- The Tamil Nadu government.
- What
- Tamil Nadu notified a law to prevent coercive recovery actions by money lending entities.
- When
- The Act received Governor's assent on June 9, 2025, and was published on June 16, 2025.
- Where
- Tamil Nadu
- Why
- To protect economically weaker sections from harsh recovery methods.
Money Lenders
Borrowers
Scope of the Act
Money Lenders
Unclear application of Act provisions for NBFCs and cooperative banks
Borrowers
Protects vulnerable sections by regulating coercive practices
- Law Name
- Tamil Nadu Money Lending Entities (Prevention of Coercive Actions) Act, 2025
- Date of Governor's Assent
- June 9, 2025
- Applies to
- Money lending entities in Tamil Nadu (excluding banks, NBFCs, co-operative banks and societies)
- Definition of 'coercive action'
- Obstructing, using violence, insulting, intimidating or persistently following the borrower
- Micro-loan definition
- Loan given to a household with upto ₹3 lakh annual income
- Language requirement
- All communications with the borrower, including loan cards, must be in Tamil