T.N. government notifies law to prevent coercive recovery of micro-loans
The State government has notified the Tamil Nadu Money Lending Entities (Prevention
of Coercive Actions) Act, 2025, which is meant to prevent coercive recovery of microloans by money-lending entities.
The Act is aimed at protecting the weaker and vulnerable groups and individuals — especially farmers, women, and self-help groups — from the coercive recovery of loans
by money-lending entities such as micro-finance institutions and money-lending agencies
operating in Tamil Nadu.
It shall apply to all money-lending entities, including digital lending platforms, but not to
banks, non-banking financial companies registered with the Reserve Bank of India, and
co-operative banks and societies.
However, the provisions of the Act relating to coercive action against the borrower shall
apply to non-banking financial companies registered with the RBI and co-operative banks
and societies.
Loan for households
Micro-loan means a loan given to a household having an annual income of upto ₹3 lakh.
A household means an individual family unit: husband, wife, and their unmarried son and
daughter. A borrower is an individual or group of individuals or a self-help group or joint
liability group, according to the Act.
Coercive action
Section 20 of the Act also lists what constitutes coercive action.
This includes obstructing or using violence against or insulting or intimidating the borrower or any of his family members
