The Bihar Micro Finance Institutions

Short title, extent, and commencement.-

1. (1) This Act may be called The Bihar Micro Finance Institutions (Regulations of Money Lending and Prevention of Coercive Actions) Act 2026.
2. (2) It extends to the whole of the State of Bihar including all districts, sub-divisions, blocks, and panchayats within the territorial jurisdiction of the State.
3. (3) It shall come into force on such date as the State Government may, by notification, appoint.

Application and scope.-

1. (1) This Act shall apply to all individuals, partnership firms, limited liability partnerships, companies, societies, trusts, digital lending platforms, mobile applications, and any other entities or persons engaged in the business of advancing micro loans or small loans within the territorial limits of Bihar, irrespective of their place of incorporation, registration, or domicile.
2. (2) The provisions of this Act shall not apply to the following entities in respect of their lending operations:
   • (a) Scheduled commercial banks as defined under the Banking Regulation Act, 1949;
   • (b) Regional Rural Banks established under the Regional Rural Banks Act, 1976;
   • (c) Non-Banking Financial Companies holding valid certificate of registration issued by the Reserve Bank of India under the Reserve Bank of India Act, 1934, and operating under RBI guidelines;
   • (d) Housing Finance Companies regulated under National Housing Bank Act, 1987;
   • (e) Primary agricultural credit societies, district central cooperative banks, and state cooperative banks registered under applicable cooperative laws;
   • (f) Government departments, statutory corporations, public sector undertakings, and agencies specifically notified by the State Government for developmental lending or financial inclusion programs.
3. (3) Notwithstanding the exemptions provided in sub-section (2), all provisions of this Act relating to prohibition of coercive recovery methods, borrower protection measures, and fair recovery practices shall apply to every entity mentioned in sub-section
4. (2) when they engage in recovery of loans from borrowers within the State of Bihar.

Definitions.—In this Act, unless the context otherwise requires:

1. (a) “Government” means the State Government of Bihar;
2. (b) “agent” means any person, employee, contractor, recovery agency, collection agent, field officer, or third-party service provider who is engaged, employed, appointed, or authorized by a lender to carry out loan disbursement, monitoring, collection, or recovery activities on behalf of such lender, and includes digital recovery platforms and automated recovery systems;
3. (c) “borrower” means any individual, or Group of individuals or a self-help group constituted under government programs, joint liability group, women’s collective, farmer producer organization, micro enterprise, or any group of persons having common economic interests who avails money in the form of a loan for any productive purpose from Micro Finance Institutions or Money Lending Agencies or Organizations under an agreement with terms and conditions that the money shall be repaid within a certain periods of time to such Micro Finance Institutions or Money Lending Agencies or Organizations, as the case may be;
4. (d) “coercive actions” means any act, conduct, behavior, or practice specified and prohibited under Section 7 of this Act when employed for the purpose of compelling repayment of any loan amount, interest, fees, or charges;
5. (e) “Department” shall mean Department of Finance, Government of Bihar otherwise expressly mentioned;
6. (f) “digital lending platform” means any website, mobile application, software platform, or electronic system through which loans are originated, processed, sanctioned, disbursed, monitored, or recovered using digital technology and internet connectivity, including peer-to-peer lending platforms and fintech applications;
7. (g) “family member” means spouse, children including adopted children, parents, grandparents, siblings, parents-in-law, children-in-law, and any other person who is wholly or substantially dependent on the borrower for sustenance and ordinarily resides with the borrower;
8. (h) “lender” includes any person, Hindu undivided family, partnership firm, limited liability partnership, company, society, trust, digital platform operator, or any other entity engaged in the business of advancing loans covered under this Act, but does not include entities exempted under sub-section

1. (2) of Section 2;
   • (i) “loan” means money advance to the borrower or equivalent value in cash or kind made by a lender to a borrower at interest explicitly charged or for any other consideration or benefit and includes:
   • (i) loans disbursed through digital platforms or mobile applications;
   • (ii) loans given for productive activities, consumption needs, emergency purposes, or any other lawful purposes;
   • (iii) revolving credit facilities and credit lines or overdrafts;
   • (iv) loans secured by gold, property, or other assets;
   • (j) “Registering Authority” means the Director (Institutional Finance) or any such official as may be appointed by the Government of Bihar by notifications, to perform the functions of a Registering Authority under this Act;
   • (k) “Appellate Authority” means Principal Secretary, Finance, Government of Bihar or any such official as may be appointed by the Government of Bihar by notifications, to perform the functions of a Appellate Authority under this Act;
   • (l) ‘Interest’ for the purposes of the terms defined under the provisions of this Act would mean a return on the amount lent by the MFI to a borrower.
   • (m) “Micro Finance Institution
   • (MFI) or Money Lending Agencies or Organizations or Small Loan Provides” means any person, partnership firm, group of persons, including a Company registered under the provisions of the Companies Act, 2013, a Non-Banking Finance Company as defined under the Reserve Bank of India Act, 1934 a Society registered under, the Societies Registration Act, 1860, and the like, in whichever manner formed and by whatever name called, whose principal or incidental activity is to lend money or offer financial support of whatsoever nature to the needy borrower;
   • (n) “vulnerable person” means and includes:
     • (i) women borrowers, particularly single women, widows, and women from marginalized communities;
     • (ii) farmers, agricultural laborers, tenant farmers, and persons engaged in allied agricultural activities;
     • (iii) members of Scheduled Castes and Scheduled Tribes as defined in the Constitution of India;
     • (iv) daily wage earners, migrant workers, and persons engaged in unorganized sector employment;
     • (v) persons with disabilities as defined under the Rights of Persons with Disabilities Act, 2016;
     • (vi) senior citizens above the age of sixty years;
     • (vii) borrowers belonging to families below the poverty line as identified by government surveys;
     • (viii) transgender persons;
     • (ix) street vendors, domestic workers, and other marginalized occupation groups;
     • (x) any other category of persons notified as vulnerable by the State Government based on socio-economic indicators.
   • (o) “Micro Loan or Small Loan” means a loan given to the household having annual household income upto three lakh rupees or such limit as the Government may fix from time to time, by notification. Explanation: For the purpose of this clause, a household shall mean an individual family unit, i.e. husband, wife and their unmarried sons and daughters.
   • (p) Words used but not defined in this Act, shall have the same meaning assigned to them under the relevant Acts.

Registration Requirement.—

1. (1) The Government may, by notification, appoint such number of officers to be the Registering Authority of money lending entities and define the areas of jurisdiction of such authority.
2. (2) The Registering Authority shall exercise such powers and perform such duties as may be prescribed.
3. (3) No money lending entity functioning in the State on the date of commencement of this Act or intending to start the business of money lending after the commencement of this Act, shall grant any loan or recover any loan without obtaining a Certificate of Registration under this Act: Provided that, every money lending entity functioning in the State as on the date of the commencement of this Act, shall, within ninety days from the date of commencement of this Act, obtain a Certificate of Registration from the Registering Authority under this Act.
4. (4) Every application for registration of money lending entity shall be submitted through the online portal as may be notified by the Government, in such electronic form, along with such documents and fees as may be prescribed.
5. (5) On receipt of such application, the Registering Authority shall verify the details furnished by the money lending entity and grant or refuse to grant a Certificate of Registration through online portal referred to in sub-section
6. (2) in such electronic form and within such time as may be prescribed: Provided that no such application shall be rejected without giving opportunity of being heard to the applicant and for reasons to be recorded.
7. (6) If no decision is made on the application for registration prescribed under sub-section
8. (3) by the Registering Authority concerned, within 90 days from the date of submission of applications, the Certificate of Registration shall be auto-generated and granted online in such form as may be prescribed.
9. (7) The certificate granted under sub-section
10. (3) or
11. (4) shall be valid for a period of three years from the date on which it is granted, subject to fulfillment of such terms and conditions specified therein: Provided that if any money lending entity intends to carry on its business in any other district or region other than the district or region where it has registered, it shall furnish the details of such registration in such electronic form as may be prescribed, to the Registering Authority of the district or region concerned where it intends to carry on its business.
12. (8) Every Certificate of Registration shall be renewed for a period of three years, in such manner and on payment of such fees and fulfillment of such conditions, as may be prescribed.
13. (9) Every application for renewal of the Certificate of Registration granted under this Act shall be made not less than sixty days before the date of expiry of the period of such certificate. Provided that the Registering Authority may entertain the application for renewal after the expiry of the prescribed aforesaid period but before the expiry of the period of the certificate, if it is satisfied that the applicant was prevented by sufficient cause from applying for renewal in time.
14. (10) On receipt of the application under sub-section (2), the Registering Authority shall verify the details furnished by the money lending entity and renew or refuse to renew the Certificate of Registration in such electronic form as may be prescribed, before the date of expiry of registration: Provided that no such application shall be rejected without giving opportunity of being heard to the application and for reasons to be recorded.
15. (11) If no decision is made on the application within the time limit prescribed under sub- section
16. (6) by the Registering Authority concerned, the renewal of Certificate of Registration shall be auto-generated and granted online in such form as may be prescribed.
17. (12) Provision for appeal.—Appeal against refusal to grant a certificate of Registration, Suspension or Revocation of certificate of registered by the registering authority, and appeal can be made before appellate authority within 60 days from the date of such refusal to grant certificate of Registration, Suspension or Revocation of certificate of registration. The appellate authority is expected to give its decision within 30 days of submission of such appeal.
18. (13) Register of MFIs. –
19. (1) Every registering authority shall maintain for the area under its jurisdiction registers of all MFIs having valid registration in such form as may be prescribed.
20. (2) The registers maintained under sub-section
21. (1) shall be published in such manner and at such intervals as may be prescribed.
22. (14) Digital lending platforms shall additionally comply with information technology security standards prescribed by the Central Government, data localization requirements as applicable, and customer protection guidelines as may be prescribed by the Government of Bihar in consultation with relevant central authorities.
23. (15) Any person or entity who advances loans without proper registration and certification shall be deemed to be carrying on illegal money lending business and shall be liable for penalties under this Act, provided that such person is given reasonable opportunity to regularize their operations within the prescribed time frame.

Transparency and disclosure obligations.—

1. (1) The effective rate of interest charged by the lenders shall be prominently displayed in all its offices, its website, and in the prospectus or brochure or advertisement notices, as the case may be.
2. (2) No Micro Finance Institution
   • (MFI) or Money Lending Agency or Organization shall recover from the borrower towards interest in respect of any loans advanced by it, whether before or after commencement of this Act, an amount in excess of the principal amount.
3. (3) Every Micro Finance Institution
   • (MFI) or Money Lending Agency or Organization shall keep and maintain a cashbook, a ledger and such other books of account in such form and in such manner as may be prescribed.
4. (4) Every loan application form shall include necessary information which may affect the interest of the borrower, so that a meaningful comparison with the terms and conditions offered by other money lending entities can be made and a proper decision can be taken by the borrower. Such application form shall indicate the documents required to be submitted with the application form.
5. (5) Every registered lender shall mandatorily comply with the following disclosure and transparency requirements before disbursing any loan:
   • (a) provide a written loan agreement in Hindi language clearly stating the principal loan amount, annual percentage rate of interest calculated on reducing balance method, processing charges, insurance premium if any, penal charges for delayed payment, total cost of credit, monthly installment amount, and complete repayment schedule with due dates;
   • (b) deliver a comprehensive pre-loan disclosure statement to the borrower at least seventy-two hours before loan disbursement, explaining all terms and conditions, borrower’s rights and obligations under this Act, consequences of default, available grievance redressal mechanisms, and contact details of regulatory authorities;
   • (c) establish and maintain an office within the State of Bihar with adequate infrastructure for borrower services, complaint resolution, and document storage, which shall remain accessible to borrowers during prescribed business hours;
   • (d) ensure that all communications, documents, notices, and correspondence with borrowers are provided in Hindi or the local language understood by the borrower, and no borrower shall be compelled to understand or sign documents in any language other than Hindi or the local language;
   • (e) issue computer-generated or properly signed receipts bearing the name, address, and registration number of the lender for every repayment received from the borrower, whether in cash, cheque, or through digital payment modes, and such receipts shall clearly show the amount received, date of payment, and outstanding balance;
   • (f) supply photocopies of all loan-related documents including the loan agreement, repayment schedule, and transaction history to the borrower free of cost within seven working days of written request;
   • (g) display prominently at all branch offices, on websites, and in all advertisements the maximum interest rates charged, processing fees, penal charges, standard terms and conditions of loans, and grievance redressal contact information.
6. (6) Every lender shall provide the borrower a loan passbook or digital loan statement containing the following mandatory information:
   • (a) name, address, and registration details of the lender and complete details of the borrower;
   • (b) principal amount sanctioned and actually disbursed with dates;
   • (c) effective annual percentage rate of interest and method of calculation;
   • (d) detailed breakdown of all charges, fees, insurance costs, and additional expenses;
   • (e) complete repayment schedule showing installment amounts and due dates;
   • (f) acknowledgment and date of all repayments received with running balance;
   • (g) current outstanding principal and interest amounts after each payment;
   • (h) final discharge certificate upon complete repayment of the loan.
7. (7) No lender shall charge any amount, fee, or penalty that is not explicitly disclosed in the loan agreement and pre-loan disclosure statement signed by the borrower.
8. (8) Every lender shall establish a toll-free helpline number staffed by trained personnel for borrower queries, complaints, and assistance, and such helpline shall be operational during business hours on all working days.
9. (9) Submissions of monthly statement by MFIs – Every MFI shall submit a Monthly Statement to the Registering Authority before 10th day of every month giving therein the list of borrowers, the loan given to each and the interest rate charged on the repayment made.
10. (10) Provision of submissions of annual returns – Every MFI shall submit annual returns for the financial year ending 31st March every year before to the Registering Authority latest by the end of month “May” of next financial year.
11. (11) Multiple-lending Over-borrowing.— 1) Non-Banking Financial Company
    • (NBFC) – Micro Finance Institutions
    • (MFIs) can lend to individual borrowers who are not member of Joint Liability Group
    • (JLG) or Self Help Group
    • (SHG) or to borrowers that are members of Joint Liability Group
    • (JLG) or Self Help Group (SHG). 2) A borrower cannot be a member of more than one Self Help Group
    • (SHG) or Joint Liability Group (JLG). 3) Not more than two
12. (02) Micro Finance Institutions
    • (MFI) or Money Lending Agency or Organization shall lend to the same borrower. 4) There shall be a minimum period of moratorium between the grant of the loan and the due date of the repayment of the first installment. The moratorium shall not be less than the frequency of repayment. For Example: In the case of weekly repayment, the moratorium shall not be less than one week. 5) Recovery of loan made in violation of the recovery norms shall be deferred till all prior existing loans are fully repaid. 6) All sanctioning and disbursement of loans shall be done only at a central location and more than one individual shall be involved in this function.

Prohibition of security requirements for Micro loans Prohibition of security requirements for Micro loans.—

1. (1) No lender shall demand, obtain, or retain any form of security, collateral, guarantee, or third-party assurance for loans not exceeding such amount as may be prescribed by the State Government under this Act, and such loans shall be advanced solely on the basis of borrower's creditworthiness, repayment capacity, income assessment, and such other criteria as may be prescribed.
2. (2) The Government of Bihar shall within 90 days of the commencement of this Act, prescribe by rules, the threshold amounts up to which no security or collateral may be required, taking into consideration the economic conditions of borrowers, regional variations in income levels, inflation rates, and the need to promote financial inclusion while ensuring reasonable protection to lenders.
3. (3) Any security, collateral, or guarantee obtained by any lender for loans covered under sub-section
4. (1) prior to the commencement of this Act shall be deemed void and unenforceable, and shall be returned to the borrower or guarantor within thirty days of such commencement without any cost or condition.
5. (4) For loans exceeding the prescribed threshold amounts but remaining within the overall loan limits specified in this Act, lenders may obtain security only in the following permissible forms:
   • (a) pledge of gold ornaments with proper valuation and storage safeguards;
   • (b) lien on bank deposits or government securities;
   • (c) mortgage of immovable property other than the borrower's primary residence or agricultural land being personally cultivated;
   • (d) guarantee from financially sound third parties with their explicit written consent and full disclosure of liability; provided that the value of such security does not exceed the loan amount by more than twenty-five percent and the security arrangement does not impose undue hardship on the borrower or guarantor.
6. (5) No lender shall retain, confiscate, or demand as security any document that is essential for the borrower’s daily life or livelihood, including original documents of residential property used for actual residence, agricultural land being personally cultivated, ration cards, Aadhaar cards, voter identity cards, driving licenses, educational certificates, caste certificates, income certificates, pension documents, or any other government-issued entitlement documents.
7. (6) Where permissible security is taken, the lender shall execute a proper security agreement clearly specifying the security provided, conditions for release, and borrower’s rights, and shall return such security immediately upon full repayment of the loan.
8. (7) The Government of Bihar may, from time to time, review and revise the prescribed threshold amounts under sub-section
9. (2) based on economic conditions, borrower feedback, and the functioning of the microfinance sector, provided that any revision reducing the threshold limits shall not apply to existing borrowers and loans sanctioned before such revision.

Prohibited coercive recovery methods and practices.—No lender, agent, employee, contractor, or representative acting on behalf of any lender shall engage in, attempt, threaten, facilitate, or encourage any of the following acts, practices or similar activities for the purpose of recovering any loan amount, interest, charges, penalties, or any other amount claimed to be due:

1. (1) Physical coercion, violence, and intimidation.—
   • (a) Physical assault, battery, wrongful restraint, criminal intimidation, or violence against the borrower, family members, or associates;
   • (b) Threatening physical harm or violence to any person connected with the borrower;
   • (c) Confining, restraining, or preventing free movement of the borrower or family members through force or intimidation;
   • (d) Damaging, destroying, or threatening to damage any property belonging to the borrower or guarantors;
   • (e) Forcibly entering the borrower's residence, workplace, or premises without lawful authority or remaining after being asked to leave.
2. (2) Psychological harassment and mental torture.—
   • (a) Using abusive, obscene, threatening, casteist, communal, or discriminatory language in any communication;
   • (b) Making repeated calls, messages, or visits causing mental distress or disrupting daily life;
   • (c) Contacting borrowers before 7:00 AM or after 8:00 PM on weekdays, or anytime on Sundays and holidays, without express written consent;
   • (d) Publicly shaming, humiliating, or exposing the borrower's financial status or personal information to embarrass or coerce;
   • (e) Creating public disturbances at the borrower's residence, workplace, or neighborhood;
   • (f) Making false representations about legal consequences or creating artificial urgency for payment.
3. (3) Digital harassment and cyber coercion.—
   • (a) Sending threatening, intimidating, or abusive messages through SMS, WhatsApp, email, or social media platforms;
   • (b) Disclosing or publishing personal information, financial details, photographs, or private data without explicit written consent;
   • (c) Creating or distributing fake legal notices, court summons, or fraudulent legal documents;
   • (d) Impersonating police officers, court officials, lawyers, or government authorities;
   • (e) Accessing or using the borrower's phone contacts, call logs, or digital data without separate written consent;
   • (f) Installing tracking devices or monitoring software on borrower's devices without lawful authority;
   • (g) Creating fake profiles or misusing borrower's identity on digital platforms.
4. (4) Economic coercion and livelihood interference.—
   • (a) Seizing, confiscating, or unlawfully retaining documents, certificates, or government-issued entitlement papers;
   • (b) Interfering with the borrower's workplace attendance, employment, or business operations;
   • (c) Contacting employers, colleagues, or business associates to jeopardize professional relationships;
   • (d) Compelling disposal of property under duress;
   • (e) Blocking access to bank accounts or legitimate income sources.
5. (5) Social pressure and community harassment.—
   • (a) Pressuring family members, relatives, friends, or neighbors to create social coercion for repayment;
   • (b) Visiting children's schools or educational institutions to create embarrassment;
   • (c) Disrupting religious places, social functions, festivals, or community gatherings for recovery purposes
6. (6) Illegal and unethical recovery practices.—
   • (a) Engaging persons with criminal background or history of violence as recovery agents;
   • (b) Using unregistered or unauthorized recovery agencies or collection personnel;
   • (c) Demanding amounts exceeding limits prescribed under this Act or other applicable laws;
   • (d) hidden charges, or undisclosed fees;
   • (e) Attempting recovery from guarantors or family members without proper legal procedures.

Power to cancel or suspend registration.—

1. (1) The Registering Authority may, at any time, either suo motu or upon receipt of a complaint from a borrower or any other affected person, issue a notice to the lender to show cause as to why their compliance certification or registration under this Act should not be cancelled, if it is of the opinion that the lender has contravened any provision of this Act or rules made thereunder.
2. (2) Upon consideration of the reply, if any, and after providing the lender an opportunity of being heard, the Registering Authority may cancel or suspend such registration, by recording reasons in writing.
3. (3) Pending the inquiry under sub-section (1), the Registering Authority may suspend the compliance certification or registration, for reasons to be recorded in writing.
4. (4) A lender whose registration or certification is suspended or cancelled shall not disburse any new loans or recover existing ones during the period of suspension or after cancellation.

Power to inspect, summon, and seize documents.—

1. (1) The Registering Authority or any officer authorised by it may enter the premises of any lender or person believed to be engaged in lending activities, and inspect or demand production of records and documents to ensure compliance with this Act.
2. (2) The authorised officer may seize any documents deemed necessary for examination, investigation, or legal proceedings. Such documents shall be retained only for such period as necessary for these purposes.
3. (3) The Registering Authority or authorised officer may summon and examine any person connected with a lender if believed to possess relevant information.

Complaints mechanism.—

1. (1) Any borrower may lodge a complaint alleging violation of this Act by a lender: a) with the Registering Authority that issued the compliance certification; b) with the Registering Authority having territorial jurisdiction where the violation occurred; or c) with the jurisdictional police station for violations involving physical violence, criminal intimidation, or serious threats.
2. (2) Every authority mentioned in sub-section
3. (1) shall be bound to receive, register, acknowledge, and process every complaint filed under this Act within seven working days, and no complaint shall be refused or rejected on technical grounds without providing the complainant reasonable opportunity to rectify deficiencies.
4. (3) The Registering Authority shall follow procedures similar to those outlined in Section 8 and may pass such orders as deemed fit.
5. (4) Where prima facie evidence of a cognizable offence is found, the Registering Authority shall forward the complaint to the jurisdictional police station.
6. (5) No police officer shall refuse to receive or register such complaint.

Appointment of Ombudspersons.—

1. (1) The Government of Bihar may, by notification, appoint one or more Ombudspersons for the resolution of civil disputes between borrowers and lenders.
2. (2) The powers, functions, qualifications, jurisdiction, and procedures for the Ombudsperson shall be prescribed by the Government of Bihar.
3. (3) Nothing in this section shall bar the jurisdiction of civil courts to adjudicate disputes between the parties.

Offence of unregistered lending.—Any person or entity who carries on the business of lending loans in violation of Section 4 (without obtaining registration and compliance certification) shall be punishable with imprisonment for a term which may extend to three years, and with a fine which may extend to five lakh rupees, or with both.

Failure to comply with transparency and reporting requirements.—Any lender who

1. (a) fails to provide required disclosures, loan documentation, or receipts to borrowers under Section 5; or
2. (b) fails to establish a registered office, helpline, or deliver pre-loan disclosure under this Act; or
3. (c) fails to submit annual returns as required under section-5

1. (10) of this Act shall be punishable with a fine not less than ten thousand rupees but which may extend to one lakh rupees.

Prohibited coercive recovery practices.—Any lender or agent who engages in, facilitates, or attempts any form of coercive recovery in violation of Section 8 shall be punished

1. (a) for physical coercion, stalking, harassment, or threats under clauses (1),

1. (2) and
2. (6) of Section 7, with imprisonment up to three years or with fine up to five lakh rupees, or both;
   • (b) for acts involving digital coercion, misuse of identity, illegal surveillance, or intimidation through impersonation under clause
3. (3) of Section 7 or for seizure of essential documents or pressure on family and children under clause
4. (4) and
5. (5) of Section 7 with imprisonment up to five years or fine up to five lakh rupees, or both.

Abetment of suicide.—Where a borrower or their family member commits suicide, and it is proven that coercive recovery practices as defined in Section 7 were used immediately prior to such suicide, the lender or their agents shall be deemed to have abetted the suicide, and shall be punishable under Section 108 of the Bharatiya Nyaya Sanhita, 2023.

Punishment for repeat offenders.—Who ever having been previously convicted of an offence punishable under this Act; shall be punishable with imprisonment for a term which shall not be less than five years but which may extend to ten years and with fine which shall not be less than ten lakh rupees but which may extend to five crore rupees.

General penalty.—Any contravention of this Act or the rules made thereunder, for which no specific penalty is provided, shall be punishable with a fine up to ten thousand rupees.

Cognizable and Non-bailable Offence.— All offences under Sections 12, 14, 15 and 16 shall be cognizable and non-bailable except sections 13 and 17.

Corporate and institutional liability.—Where any violation under this Act is committed by a company, partnership firm, society, or other entity, every director, partner, manager, or officer who was in charge of and responsible for the conduct of business at the time of violation shall be deemed guilty of the violation and shall be liable for punishment, unless such person proves that the violation occurred without their knowledge and they exercised due diligence to prevent such violation.

Suspension or cancellation of registration upon conviction.—Upon conviction of any lender or agent under this Chapter, the Registering Authority shall suspend or cancel their compliance certification or registration under this Act.

Relief measures for affected borrowers.—

1. (1) Discharge of illegal and excessive loans.—All loans advanced by unregistered lenders, loans that violate the interest rate caps specified in this Act, loans obtained through coercive means, or loans that violate other provisions of this Act shall be deemed discharged to the extent of violation, and borrowers shall have no legal obligation to repay such excess amounts.
2. (2) Prohibition on civil recovery of illegal amounts.—No civil court, tribunal, authority, or arbitrator shall entertain any suit, application, petition, or proceeding for recovery of loans or amounts that are deemed discharged under sub-section (1), and all pending proceedings for recovery of such illegal amounts shall abate immediately upon determination of such illegality.
3. (3) Relief from excessive recovery.—Where any borrower has already repaid amounts exceeding the limits prescribed under this Act such borrower shall be entitled to refund of excess amounts with interest at the rate of twelve percent per annum from the Borrower Protection Fund or directly from the lender.

Bihar database.—

1. (1) The Govt. of Bihar may designate an Authority, whether existing or to be constituted, which shall create, maintain and operate an online database for information on lenders operating in Bihar and which shall have the facility for lenders to apply for registration, renewal etc. and issuance of certificate by registering authority and all the related matters.
2. (2) The authority designated under sub-section
3. (1) may require any Regulator or the Competent Authority to share such information on lenders, as may be prescribed.

Designated Court.—

1. (1) For the purpose of this Act, the Government may, with the concurrence of the Chief Justice of the Patna High, Court, by notification in the Official Gazette, constitute one or more Designated Courts in the cadre of Subordinate Judge including ADJ for such area or areas or for such case or class or group of cases, as maybe specified in the notification.
2. (2) No court, including the court constituted under the Presidency Towns Insolvency Act, 1909 and the Provincial Insolvency Act, 1920, other than the Designated Court, shall have jurisdiction in respect of any matter to which the provisions of this Act are invoked.
3. (3) Any pending case in any other court to which the provisions of this Act apply shall, on the date of publication of this Act, stand transferred to the Designated Court.

Special Public Prosecutor and Special Government Pleaders.—The Government may, by order appoint one or more Advocates of not having less than 7 years practice as Special Public Prosecutor/Special Government Pleader in consultation with the District and Sessions Judge of the concerned District for the purpose of conduction the cases in the Designated Court.

Procedure and powers of designated Court regarding offences.—

1. (1) The Designated Court may, on perusal of the police report of the facts constituting an offence under this Act upon a complaint made by an officer authorized in this behalf by the State Government take cognizance of the offence without the accused being committed to it for trial.
2. (2) While trying the accused person the Designated Court shall follow the procedure prescribed in the provision of The Bharatiya Nagarik Suraksha Sanhita, 2023.
3. (3) The Designated Court will exercise the power of remand with regard to person forwarded to it as provided under the provision of The Bharatiya Nagarik Suraksha Sanhita, 2023.
4. (4) The Designated Court, while trying the offence under this Act, may also try an offence other that the offence under this Act with which, the accused may be charged at the same trial under The Bharatiya Nagarik Suraksha Sanhita, 2023.

Appeal.—

1. (1) An appeal shall lie against the final order passed by the Designated Court in the judicature of High Court, Patna within 60 days from the date of final order.
2. (2) Any Person/MFIs convicted on a trail held by the Designated Court may appeal to the judicature of High Court, Patna.

Protection of Action taken in good faith.—No suit or other proceedings shall lie against the

Power to make rules Power to make rules.—

1. (1) The State Government may, by notification in the Official Gazette make rules to carry out the purpose of the Act.
2. (2) The power to make rules conferred by this section shall be subject to the condition of the rules being made after previous publication.
3. (3) Every rule or notification made under this Act shall be laid as soon as may be after it is made, before each House of the State Legislature while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions and if before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or notification or both Houses agree that the rule or notification should not be made, the rule or notification shall, from the date on which the modification or annulment is notified have effect only in such modified form or

be of no effect as the case may be; so, however, that any such modification or

annulment shall be without, prejudice to the validity of anything previously done under that rule or notification.

1. (4) The Government of Bihar may, make rules to carry out the provisions of this Act and unless they are expressed to come into force on a particular day, shall come into force on the day on which they are so published. All notifications issued under this Act shall, unless they are expressed to come into force on a particular day, come into force on the day on which they are so published.

Officers to be public servants.—Every officer, Registering Authority, Ombudsperson, or person acting under the provisions of this Act shall be deemed to be a public servant within the meaning of Section 2

1. (28) of the Bharatiya Nyaya Sanhita, 2023.

Act to be in addition to other laws.—The provisions of this Act shall be in addition to, and not in derogation of, any other law for the time being in force. Provided that in the event of any conflict, the provisions of this Act shall prevail to the extent of such conflict in matters relating to micro finance and small loan recovery within the State of Bihar.

Power of State Government to issue directions.—The State Government may, from time to time, issue such directions not inconsistent with the provisions of this Act or rules made thereunder to lenders, Registering Authorities, Ombudspersons, or any other officers or persons employed for implementation of this Act, as it may deem fit, and all such persons shall comply with such directions.

English language version of the act shall prevail in the meaning and interpretation of the translated version.—In case of any discrepancy in the meaning and interpretation of the translated version of this Act, the English language version shall be binding in all respect and shall prevail.

-1 33. Power to remove difficulties.—If any difficulty arises in giving effect to the provisions of this Act, the Government of Bihar may, by an order, published in the Official Gazette, Make such provisions not inconsistent with the provisions of this Act which appear to it to be necessary or expedient for the purposed of removing the difficulty. Provided that, no such order shall be made under this section after the expiry of the period of two years from the date of commencement of this Act.