By Shanker Man Singh
According to Osho, love is not just a romantic or emotional relationship between two people, but a deep, transformative experience that encompasses all aspects of life. Osho emphasized that love should be comprehensive and inclusive, not limited to a particular person or relationship.
In such a case, credit should not be considered something that will spoil this relationship. After the industry and business got into trouble due to non-payment of loans and credit, the businessmen of Nepal demanded to frame a law for the collection of credit.
Some time ago, the government was asked to frame a law to collect credit. Since there is no legal system for collecting credit in Nepal and the entire economic sector is in trouble if the credit given by industrialists is not collected, entrepreneurs have been holding the view that the government should take a collective initiative to make a law for collecting credit.
In Nepal, although there are bodies like the Revenue Tribunal for the resolution of revenue-related disputes and the Debt Recovery Tribunal for the recovery of loans from banks, there is no judicial body related to credit collection.
Just as there are revenue and debt collection agencies, credit-collection laws and agencies are also necessary.
What is credit?
The word “credit” has many meanings in the financial world, but it generally refers to an agreement in which the borrower receives money or something else of value and commits to repay the lender at a later date, usually with interest.
Credit can also refer to a person’s or company’s creditworthiness or credit history—as in “he has good credit.”
In the world of accounting, it refers to a specific type of bookkeeping entry. Credit is generally defined as an agreement between a lender and a borrower.
Credit can also refer to the creditworthiness of a person or business. In accounting, a credit is a type of bookkeeping entry, as opposed to a debit.
Credit represents an agreement between a creditor (lender) and a borrower (lender). The borrower makes a promise to the lender, often with interest, or risks financial or legal penalties. Extending credit is a practice that dates back thousands of years to the dawn of human civilization, says anthropologist David Graeber in his book Debt.
There are different forms of credit. Common examples include car loans, mortgages, personal loans, and lines of credit. Essentially, when a bank or other financial institution makes a loan, it “credits” the money to the borrower, who must pay it back at a future date.
Credit cards may be the most ubiquitous example of credit today, allowing consumers to purchase anything on credit. The card-issuing bank acts as an intermediary between the buyer and the seller, extending credit to the buyer in full while paying the seller, who can repay the loan over time while charging interest until it is paid in full.
Similarly, if buyers receive products or services from sellers that do not require payment until later, that is a form of credit. For example, when a restaurant receives a truckload of produce from a wholesaler who will bill the restaurant a month later, the wholesaler is providing a form of credit to the restaurant owner. This is the concern of tis write up in the winter session of the Parliament.
Other Definitions of Credit
“Credit” is also used as an abbreviation to describe the financial soundness of businesses or individuals. A person with good or excellent credit is considered a lower risk to lenders than someone with bad or poor credit.
A credit score is a way in which individuals are classified in terms of risk, not only by potential lenders but also by insurance companies and, in some cases, landlords and employers. “Bill to bill” payment is one of the many ways in business. In Nepali business, especially the way of doing business with wholesale and retail businesses, this practice is usual and prevalent.
If a bill cannot be paid, the next one is usually not delivered. There is also a need for lending laws In the world of accounting, “credit” has a more specific meaning.
It refers to a bookkeeping entry that records a decrease in assets or an increase in liabilities (as opposed to a debit, which does the opposite). For example, suppose a retailer buys merchandise on credit. After the purchase, the company’s inventory account increases (by debiting) the amount of the purchase, adding assets to the company’s balance sheet.
However, its accounts payable area also increases by the amount of purchases (through credit), adding to the liability. It seems that industrialists are forced to lend money in the market and there is no legal system for collecting loans.
It is also a reality that due to the problem of non-borrowing, large sums of money are invested in the interest-free market, and due to the recession in business, industrialists have to pay 90 percent of their profits in bank interest.
There is a harsh reality of having to sell even if it is on credit for the fear that the entire industry business will collapse if the product is not sold. In this context, there is a possibility of reducing the problem if there is a system to create a law to collect debt, to recognize VAT will as “Tamsuk”. This is a very new issue for Nepal.
If there is a separate law related to credit recovery, there will not be much risk in the investment of businessmen. Businessmen say that in such cases, various laws are involved in the case, but when it takes 10 years for a decision to be made, businessmen face problems.
They say that if there is a separate law related to this, it will have a positive impact not only on the private sector but also on the country’s economy. If the relationship is bad, problems such as not paying the amount due and running away are developing in Nepal.
For this reason, it seems that a debate has started on the issue that a separate law is needed related to credit collection.
Even if someone does not pay the amount due for using or purchasing goods and services, it does not mean that the law will not punish them. The problem now is which of the criminal and civil cases of this nature? Businessmen say it is not clear. All developed countries have separate laws related to trade. It is important to decide what kind of action will be taken against those who have to pay the price of the goods and do not pay the price when selling based on will.
At present, action can be taken according to some provisions in the Civil Code, 074. However, that alone is not enough. It will be easier if there is a separate law.
Another thing, this is not only a problem of traders. If you take the goods and don’t pay, where will you go? Not only that but if they do not get the right product, where will the consumer go?
If there is a separate law, the matter of consumer interest is also there. When such a problem arises, there is a legal provision in the Civil Code that can be cancelled within 2 years. Nothing happens after 2 years. There should be a provision for a decision within 15 days for credit recovery. If this happens, there will be no problem in industrial businesses. Hardly anyone would have thought that the buying and selling of goods on credit in Nepal would bring this level of extremes. However, now in the market, from the industrialists to the general retailers, they are under stress due to not taking loans. Borrowing and growing is not a new thing in general when business is doing well. The cycle goes on and on. Even those who take it on loan either take it for consumption or sell it. If it is for goods taken for consumption, it will be paid when the money comes. However, if he took it for sale, he may not have received any money.
Consumer Law advises on protection under the National Consumer Credit Protection Act. Under credit law, consumers have important protections, such as certain information about credit agreements must be disclosed to consumers.
Mandatory notices:
Credit providers must take certain steps before seizing goods and assets, and before starting court proceedings. For example, they may be required to issue a default notice giving at least 30 days to repay any arrears before court action or repossession can occur.
Certain procedures may have to be followed for the repossession of goods (including cars). Credit providers and brokers should have an external dispute resolution plan.
Consumers can request documents from credit providers. Consumers can challenge unfair contracts and unfair credit (responsible credit). Consumers should have the right to apply for repayment arrangements based on financial hardship.
Examples of credit/loans to which credit laws generally apply: Car loans Personal loans, Home loans, Consumer leases (such as car rentals and rental agreements for goods) Credit cards Investment property loans.
Examples of loans to which credit laws do not apply: Short-term loans (less than two months) Insurance premiums Shares paid in installments, business loans and business leases for investment loans, employee loans and other financial transactions related to employment, such as new leases, overdrafts not arranged in advance with financial institutions, charge cards when the entire balance must be paid each month.
It is not unusual for lenders and their agents to ask borrowers to sign a declaration of business or investment purpose stating that the loan is for purposes not regulated by credit law. It is customary to accept such a declaration as evidence that the credit laws do not apply, unless the creditor or their agent knew, or had reason to believe, that the credit was actually for personal purposes, or largely for personal purposes.
The views expressed in this article are the author’s own and do not necessarily reflect People’s Review’s editorial stance.
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