Hello
apart from my criminology business, i run successful microfinance business model. As mentioned above if you folow following steps, you are safe. i can understand when you lend, you also want to sleep good.
1. Obtain Money Lending License from the Registrat. It is simple and in gujarat it cost 250 RS for 5 years. This license will protect your interest and using this license, all your fianance suit and claime become valid in the law of court.
2. obtain 2 cheque on every 25000 Indian rupees you finance. some may ask for 1 but i would advise 2 cheque.
3. follow the accounting rule as per the money lending law, which may be explained by the registar or your CA.
4. as you have money lending license, generally you will be able to register any mortgage. go for registered mortgage for the amount you lend. prepare it from good lawyer. in this situation expect an amount of 5000/10000 expenses for stam duty, registrstion charge and legal fees. if you want honest and correct business growth, you must follow this procedure.
5. always give priority to government employee for loan along with others. you may also seek gold as security.
6. since you have mortgage, you have first lien, right over the property no matter what would happned to the borrower. as your underlying security is not the borrower but the property that you take on mortgage. never go for equitable mortgage as it shound NO EXPENSES but it also run some serious risk.
7. cheques will give you right to fild case under saction 138 NI, when it bounced.
8. keep the minimum possible time on mortgage for the repayment. for ex. if borrower demand 5 years repayment, you may approach 2/3 years. being a small businessman this is important point as for an example, if borrower fail to pay the capital within first 2 year when you have 5 year stated in agreement, in normal circumstances, you may not approach court for the full recovery against the mortgage property until your agreed time lapsed. this apply due to money lending act.
if you want professional help, advise or agreement to be prepared by professional, we at www.chintaless.com do that. if you need assistance mail at chintaless@gmail.com
good luck with your business
