How to get a money lending licence in Kerala

Which law covers you

• Kerala Money-Lenders Act, 1958 (Act 35 of 1958) — lending and pawnbroking in one Act; the old Madras Pawnbrokers Act was repealed for Malabar by it.
• Kerala Money-Lenders Rules, 1964 — Form A, the registers and the auction procedure.
• Kerala Prohibition of Charging Exorbitant Interest Act, 2012 — any rate above the Act’s ceiling is exorbitant.

Every shop or branch needs its own licence and its own security (section 3). Banks and RBI-registered NBFCs are outside the Act.

Who issues the licence

The licensing authority is an officer of the State GST Department appointed by the Government, under the Commissioner in Thiruvananthapuram; Inspectors of the rank of Sales Tax Officer check the books, and the department’s intelligence and Deputy Commissioner offices act on unlicensed lending. The department does not name the officer on its website — the e-services helpdesk will tell you which office covers your district.

Apply and renew online

New licences and renewals both run through the State GST Department’s e-services dashboard:

1. New licence: Business registration → “Kerala Money Lenders Act”, which opens the KVATIS registration; fill Form A (below), attach the fee challan and the security, and submit.
2. Renewal, amendment or cancellation: log in to KITIS with your KML licence number (first time: Forgot Password sends an e-mail link) → KML Renewal → Renew Licence → Pay and Renew → OTP → e-Treasury payment → Registration Certificates → download.
3. Payments go through the e-Treasury gateway (iCOMITRAX); keep the GRN. Helpdesk: kitishelp.sgst@kerala.gov.in.

The paper route — Form A to the licensing authority — still exists under Rule 3.

Documents to keep ready

Form A and the Rules ask for more than most states:

• Names, addresses and father’s name of the proprietor or every partner
• Property owned by the applicant (and every partner): survey or thandapper number, extent, village, taluk and district
• A solvency certificate and its details
• The shop address, any other shops and their licences, and the date you will start
• Whether you will lend only, or also take deposits (deposits only as the RBI allows)
• The amount you propose to lend in the year, with a declaration in Form AAA of what you lent last year
• The fee challan, and the security as a treasury savings-bank passbook or treasury fixed deposit pledged to the authority (Rule 3A)
• Offices commonly add a conduct certificate, a nativity certificate, the rent agreement, a photograph and Aadhaar

Fees and security

“Amount lent” is the highest total outstanding on any single day of the previous year, so a gold-loan book of ₹12 lakh at its peak means the ₹1 lakh security. Each branch pays its own fee and security, and the authority can ask for more security if your liabilities exceed your assets (section 11A). The renewal fee is not consistently stated — the Act implies the full ₹6,000, an old Rule says ₹1,000 — so take the figure KITIS shows at payment.

Validity and renewal

A licence expires on 31 March, the last day of the financial year, and is renewed year by year on the same conditions. The renewal application (Form AA) must reach the authority by 1 May with proof of the fee; a late renewal can be allowed retrospectively on a penalty of up to the licence fee. The licence is treated as valid until you actually receive a refusal.

Interest you may charge

Since 1 April 2019 the ceiling is written into section 7: not more than 18% simple interest a year, plus a processing charge of 2%. No gifts, commissions or other charges beyond the incidental ones the Rules allow (stamps, registration, postage). Interest taken above the ceiling is forfeited with a penalty of up to three times, and under the 2012 Act it is a cognizable, non-bailable offence carrying up to three years and a ₹50,000 fine. Compound interest is outside the ceiling as worded — count simple interest in Kerala.

What the licence obliges you to do

• Name board with “pawnbroker” in English and Malayalam (section 6), and the licence number on every record, receipt, board and advertisement; advertisements filed with the Inspector within 30 days.
• A pawn ticket (Form H) for every pledge, a pledge book (Form M), sale book (Form I) and redemption receipts (Form L); a receipt for every payment and a statement of account on request. Books may be kept in Malayalam, Tamil or English.
• Returns: a quarterly statement in Form G by the 20th after each quarter, and the annual Form G with accounts audited by a chartered accountant by 30 September.
• Insure every pledge for not less than its market value; if a pledge is lost to theft or fire you owe at least the principal, interest and a quarter of the principal on top (section 9G).
• Open to inspection of cash, registers, safes and pledges (section 10A); notice before moving the shop; suspected stolen goods reported to the police.

Unredeemed gold: the auction rules

A pledge can be redeemed for one year plus seven days of grace — or the longer period on the ticket — and until it is actually sold (section 9E). Then:

1. Sale only by public auction (section 9F), after a registered-post notice to the pawner and public notices two weeks ahead (Rule 16).
2. Gold above 14 carat needs the auction confirmed: by the Inspector up to ₹25,000, the Inspecting Assistant Commissioner up to ₹1 lakh, the Deputy Commissioner up to ₹3 lakh, and the Board above that.
3. An extract of the sale goes to the pawner within a week; the surplus is payable on demand for three years, and a deficit can be set off within twelve months. The pawnbroker may bid.

Our auction guide covers the notices and the paper trail.

Lending without a licence

Lending or pawnbroking without a licence, or in breach of it, is punished with three months to three years’ imprisonment and a fine of up to ₹50,000, and it is a cognizable offence (sections 12 and 17); the department can add a penalty of up to ₹25,000 (section 18C). Entering a false amount or rate costs six months and the licence; taking a pledge from a minor or a drunk person, or buying a pledge except at auction, six months. The employer answers for staff (section 18G). The Supreme Court has held RBI-registered NBFCs to be outside the Act; a private shop is squarely inside it.

How software fits in

GoldKhata prints the pawn ticket and keeps the pledge book, sale book and redemption receipts as you work, gives every payment a receipt with the licence number, counts the redemption window and notice dates, and has the audited-year figures ready for the Form G returns. Set the interest method to simple at the rate you choose — the software keeps every loan inside the 18% ceiling.

Sources

• Kerala Money-Lenders Act, 1958 — text (State GST Department)
• Kerala Money-Lenders Rules, 1964 and Form A
• Kerala Finance Act, 2013 (fee) and Kerala Finance Act, 2019 (interest ceiling)
• KITIS handbook — KML renewal

Frequently asked questions