Operating a money lending or girvi business in India without a proper license is illegal. Every state in India has its own Money Lenders Act that requires formal licensing for any business that lends money against collateral or otherwise.
Why a Money Lending License is Non-Negotiable
**Without a license:**
•Operating illegally — subject to fines and criminal penalties
•Cannot enforce loan repayment through legal channels
•No protection if customers dispute terms
•Risk of business shutdown
**With a license:**
•Legal right to operate your lending business
•Ability to pursue loan recovery through courts if needed
•Customer trust and credibility
Which Law Applies to You?
| State | Governing Act |
|-------|--------------|
| Rajasthan | Rajasthan Money Lenders Act, 1963 |
| Uttar Pradesh | U.P. Regulation of Money Lending Act, 1976 |
| Maharashtra | Maharashtra Money Lending (Regulation) Act, 2014 |
| Gujarat | Gujarat Money Lenders Act, 2011 |
| Karnataka | Karnataka Money Lenders Act, 1961 |
| Tamil Nadu | Tamil Nadu Money Lenders Act, 1957 |
| Madhya Pradesh | M.P. Money Lenders Act, 1934 |
| Delhi | Delhi Money Lenders Act, 1938 |
Documents Required
•Aadhaar card and PAN card
•Recent passport-size photographs (4–6)
•Business registration certificate
•Shop and establishment certificate
•Bank statements (last 3–6 months)
•Character certificate from police
•Application form from district office
License Fee
•Small operations (under ₹5 lakh capital): ₹500–₹2,000
•Medium operations: ₹2,000–₹10,000
•Large operations: ₹10,000–₹50,000
Processing typically takes 4–12 weeks.
Rajasthan-Specific Requirements
Applications in Rajasthan are submitted to the Sub-Divisional Magistrate (SDM). Use prescribed Form-A, register under the Rajasthan Shops and Establishments Act, and renew annually.
Common Mistakes to Avoid
•Operating before the license is issued
•Not renewing on time — set a reminder 2 months before expiry
•Charging above regulated interest rates
•Poor KYC compliance
•Not issuing receipts for every payment
For more on digital record keeping for compliance, read our guide on [Digital Bahi Khata for Jewellers](/blog/digital-bahi-khata-for-jewellers).
Conclusion
Getting properly licensed is the foundation of a successful and sustainable girvi business. Combined with good digital record keeping from day one, a licensed girvi business is positioned to operate professionally and grow sustainably.