Vibhav 12 August 2024

Does the judgement excluding nbfcs from state laws render state laws ineffective for all lenders?

There is a Supreme Court Judgement of 2022.

Nedumpilli Finance Company Limited vs State Of Kerala . on 10 May, 2022

Available at https://indiankanoon.org/doc/129693947/

This judgement makes certain State laws which control lending practices inapplicable to NBFCs.

Does this judgement have a wider implication where State Laws controlling lending are no longer applicable to private lenders too? I mean persons who lend monies privately and who are neither banks or NBFCs?

Please do not give broad answers unless you have read the judgement and are familiar with this area of law.

Reply Follow

Quick Summary

A recent Supreme Court judgement in 2022, Nedumpilli Finance Company Limited vs State Of Kerala, ruled that certain state laws controlling lending practices do not apply to Non-Banking Financial Companies (NBFCs). However, this judgement specifically addresses NBFCs and banking sector regulations. It does not extend to private lenders who are not banks or NBFCs. Therefore, state laws controlling lending practices remain applicable to private money lenders.

3 Replies

T. Kalaiselvan, Advocate (Advocate) 12 August 2024

The judgment discussed about the RBI rules and guidelines about banking sectors and the NBFCs alone and not about the private lenders.

The private lenders are controlled by the State under the respective state laws for the purpose.

The judgment link referred by you was fully perused and there is no mention about excluding the private money lenders from the state money lending act.

1 Like

Vibhav 12 August 2024

Thank you Advocate Kalaiselvan. You are truly among the best at LCI.