Federal Parliament nears passage of replacement bill targeting loan sharking

KATHMANDU: The Federal Parliament is on the verge of passing a crucial replacement bill aimed at combatting loan sharking. Following the approval of an ordinance related to loan sharking by both houses, the replacement bill has been introduced and successfully passed by the National Assembly on Friday.

The bill is set to be presented during the House of Representatives (HoR) meeting on Sunday, after which it will be forwarded to the Office of the President for authentication.

The initial ordinance, issued on May 3 last year, aimed to amend Nepal’s laws related to the Civil Code, specifically to address loan sharking concerns. It included provisions to ensure justice for victims of loan sharks and impose penalties on fraudulent practices.

Having received approval from the HoR on May 10 and the National Assembly on May 19, the bill to amend Nepal’s laws related to the Civil Code was officially registered on June 20 as a replacement.

The ordinance was initially tabled in Parliament on May 7. According to constitutional regulations, the ordinance becomes inactive after 60 days of submission to the parliament, necessitating the passage and verification of a replacement bill to prevent the ordinance from becoming null and void.

The replacement bill introduces section 249 (a) to the National Penal Code, 2074 BS, effectively making unfair transactions a punishable offense.

Under the proposed law, preparing a document falsely claiming a financial transaction and charging exorbitant interest rates that exceed the principal amount will both be subject to legal penalties.

Moreover, the bill deems any forceful transfer of the debtor’s immovable property, using threats, violence, or exploitation for debt recovery purposes, as an unfair transaction.

The bill outlines penalties of up to seven years of imprisonment and a fine of up to Rs 70,000 for those found engaging in transactions that contravene the law. Additionally, it empowers authorities to nullify any unfair property transfers made in favor of the individual perpetrating the unjust transaction.