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KARACHI: The business and practices of private money-lending and advancing loans on interest has become a crime as ‘The Sindh Prohibition of Interest on Private Loans Act,’ 2023 came into effect.
The law also imposes a ban on taking interest on cash or assets. Furthermore, it holds the usury company or its agent accountable for facilitating such transactions.
As per the law, interest includes any amount, big or small, over the principal, in a contract of loan or debt, regardless of whether the loan is taken for purpose of consumption or for some production activity, whether the same is charged or sought to be recovered specifically by way of interest or otherwise, or found so to be recoverable by a competent court.
Section 3(1) of the newly enacted law prohibits that no moneylender, either individually or in a group of persons, shall lend money for cars or any other purpose or advance loan to any person for the purpose of receiving interest thereon, nor shall carry on an interest-based transaction in Sindh.
Whoever contravenes these provisions, either directly or indirectly, shall be punished with imprisonment of either description which may extend to 10 years, but shall not be less than three years, and shall also be liable to fine not exceeding Rs1m.