Tamil Nadu Assembly passes Bill to prevent coercive loan recovery

Chennai: With an aim to protect economically weaker sections from loan sharks, the Tamil Nadu Assembly on Tuesday passed a bill that proposes stringent punishment for those who use coercion to recover loan money from borrowers.

Deputy chief minister Udhayanidhi Stalin said the Tamil Nadu Money Lending Entities (Prevention of Coercive Actions) Bill, 2025, was drafted as the government felt it was necessary to provide a statutory framework to protect vulnerable groups from the distress caused by aggressive tactics used by money-lending firms.

Economically disadvantaged individuals often fall victim to enticing loan offers from these entities, which later employ harsh methods to recover debts, causing significant stress. The bill prohibits money-lending entities or their agents from using coercive actions against borrowers or their families during loan recovery.

If harassment from such entities leads to a borrower or family member dying by suicide, the firm and its agents could face charges for abetment of suicide under Section 108 of the Bharatiya Nyaya Sanhita, 2023.

Udhayanidhi noted that Tamil Nadu has long led efforts to curb exploitative interest rates by regulating money-lenders and pawnbrokers.

“The money-lending entities are resorting to unethical methods of debt recovery from borrowers who are already in financial distress. These actions sometimes drive borrowers to take their own lives, shattering families and disturbing social order,” the Bill said.

Meanwhile, the Assembly also passed a Bill that transfers the powers of the Governor-Chancellor to the government in the appointment and removal of the Vice-Chancellor of the Tamil Nadu Physical Education and Sports University.

The Bill was introduced and adopted after the Supreme Court said that the bills readopted by the state Assembly, which were forwarded to the President, were deemed as having received assent.

“In the said State University Laws, the Government has been empowered to appoint and remove the Vice-Chancellor of 18 Universities. On the same lines, the Government has decided to empower themselves to appoint and remove the Vice-Chancellor of the Tamil Physical Education and Sports University,” the Bill said.