Georgetown: After a number of persons have complained of exceedingly high interest rates by private lenders, the Guyana Revenue Authority (GRA) promises to look into the matter.
After being appointed as the entity in charge of supervising pawn brokers, betting shops, car dealers and real estate agents last year, the organisation says there are penalties for registered money lenders who capitalise on the needs of innocent citizens, by charging them exorbitant interest rates as a means of earning a significant amount of cash in a short period of time.
GRA now monitors these businesses under the instruction of Finance Minister, Dr Ashni Singh, which is catered for under the Anti-Money Laundering Act. Persons have complained of being charged interest rates as high as 90 per cent per annum on monies borrowed.
While it is advised that persons borrow money through recognised financial institutions, such as commercial banks, persons are often times faced with situations that only provide the option/alternative of rendering the financial services of private money lenders.
Most times persons chose to render the services of these money lenders because they may be in a situation of dire urgency for money or they may not have established a relationship with a commercial bank of their choice, allowing them to acquire the amount of money they need.
However, the GRA stated that according to the Laws of Guyana, the Money Lender Act Chapter 91:05, Section 12, the interest charged by a money lender should not exceed three specified amounts.
In the case of secured loans other than loans secured by bills of sale, an interest at the rate of 12 per cent per annum is allowed, while in the case of loans secured by bills of sale, a simple interest rate of up to 18 per cent per annum can be charged.
The laws have also stated that in the case of unsecured loans, a simple interest at the rate of up to 32 per cent per annum can be charged.
GRA also advised that it is restricted for private money lenders to charge compound interest rates. They are only allowed to charge simple interest rates on monies lent; this means that the per cent of interest is calculated on the amount of money lent.
The figure arrived at remains the same until the person has completed the repayment of the loan. However, compound interest rates are only allowed by commercial financial institutions in the event of home mortgages and other similar transactions.
With compound interests rates, the interest rates increase every month, since the interest is continuously added to the amount of money borrowed, according to GRA.
GRA plans to look into persons who may be performing money lending services as a business and are not registered under the GRA. In order for a person(s) to be qualified to lend money, they must first acquire approval from the judicial court, obtain a business registration and then complete the application.
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