PUNJAB PROHIBITION OF INTEREST ON PRIVATE LOANS ACT 2022

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THE PUNJAB PROHIBITION OF INTEREST ON PRIVATE 
LOANS ACT 2022 
(XV of 2022) 
CONTENTS 
1. Short title, extent and commencement. 
2. Definitions. 
3. Prohibition of Private Money Lending. 
4. Punishment for Abetment. 
5. Punishment for Molestation. 
6. Complaint. 
7. Liability to pay interest on debt to stand extinguished. 
8. Offences to be tried by Court. 
9. Cognizance of offences. 
10. Adjustment of principal amount. 
11. Recovery of sums. 
12. Appeal. 
13. Power to deposit in Court money due on loan. 
14. Act to override other laws, etc. 
15. Indemnity. 
16. Power to make rules. 
17. Interpretation. 
18. Repeal. 
 
 
   
 
 
TEXT 
 
1
THE PUNJAB PROHIBITION OF INTEREST ON PRIVATE LOANS ACT 
2022 
(XV of 2022) 
    [23 August 2022] 
An 
Act 
to prohibit the business and practices of private money-lending and advancing loans 
and transactions based on interest. 
WHEREAS the injunctions of Islam as laid down in the Holy Quran and Sunnah have 
explicitly and unequivocally prohibited charging interest on loans and have declared 
war against those who do not abandon interest; 
AND WHEREAS the Constitution of the Islamic Republic of Pakistan obliges the State 
to take steps to enable the Muslims of Pakistan, individually and collectively, to order 
their lives in accordance with the fundamental principles and basic concepts of Islam 
and to provide facilities whereby they may be enabled to unders tand the meaning of 
life according to the Holy Quran and Sunnah; 
AND WHEREAS it is expedient to make a comprehensive Legislation on the subject 
for covering all the aspects of the mischief of private money lending and matters akin 
thereto; 
Be it enacted by Provincial Assembly of the Punjab as follows:  
1. Short title, extent and commencement. – (1) This Act may be called the 
Punjab Prohibition of Interest on Private Loans Act, 2022. 
(2) It extends to the whole of the Punjab. 
(3) It shall come into force at once. 
2. Definitions.– In this Act, unless there is anything repugnant in the subject or 
context– 
(a) “abetment” has the same meaning as assigned to it in Section 107 of 
the Pakistan Penal Code 1860 (Act XLV of 1860); 
(b) “borrower” or debtor” means a person to whom a loan is advanced; 
(c) “Code” means the Code of Criminal Procedure, 1898 (Act No . V to 
1898); 
(d) “financial institution” includes the State Bank of Pakistan, a commercial 
or investment bank, a leasing company, a modaraba or other concerns, 
so defined in terms of section 2(a) of the Financial Institutions (Recovery 
of Finances) Ordinance, 2001 (Ordinance No. XLVI of 2001); 
(e) “Government” means the Government of the Punjab; 
                                                      
1This Act was passed by Provincial Assembly of the Punjab on 16 August 2022; and assented to by the Governor of the Punjab 
on 22 August 2022; and was published in the Punjab Gazette (Extraordinary), dated: 23 August 2022, pp. 219-222. 
 
 
(f) “interest” includes any amount, big or small, over the principal, i n a 
contract of loan or debt, regardless of whether the loan is taken for 
purpose of consumption or for some production activity, whether the 
same is charged or sought to be recovered specifically by way of interest 
or otherwise, or found so to be recoverable by a competent Court; 
(g) “Interest based transactions” include transactions: 
(i) where differences in prices are exchanged without any intention 
of exchange of goods by the parties involved; or 
(ii) where sale is made on credit for higher price and re purchase of 
the same for lower price on cash, basis by the original owner in a 
given transaction; or 
(iii) where two prices are stipulated in the same deal that is to charge 
lower or discounted price for shorter period or given listed price , 
for longer period by the buyer in a given transaction. 
(h) “loan or debt” means an advance whether of money or in kind, where 
the repayment is guaranteed on demand or after a specified period. 
(i) “molest”-a person shall be deemed to molest another person if he– 
(i) obstructs, or uses violence or criminal force to or criminally 
intimidates, such other person; 
(ii) Interferes with any property owned or used by him or deprives 
him of, or hinders him in the use of any such property; and 
(iii) Does any act calculated to i ntimidate the members of the family 
or such other person; 
(j) “money lender” means a person, other than the Federal or Provincial 
Government or a financial institution, who lends money on interest or 
deals in interest based transactions and includes any person appointed 
by him to be in charge of a branch office or branch offices or a liaison 
office or any other office by whatever name called, of his principal place 
of business and a pawn broker who carries on the business of taking 
goods and chattels in pawn or pledge for a loan, offering payday loans, 
small personal loans or credit chits. 
 Explanation: Where a money lender is resident outside the province, 
the agent of such person resident in the Province, shall be deemed to 
be the money lender in respect of that business for the purposes of this 
Act. 
(k) “Prescribed” means prescribed by rules under this Act; 
(l) “principal amount” in relation to loan means the amount actually lent to 
the debtor; · 
(m) “Province” means the Province of the Punjab; and 
(n) “Rules” means rules made under this Act. 
 
3. Prohibition of Private Money Lending. – (1) No money lender either 
individually or in group of persons shall lend money for any moveable or immoveable 
 
 
good or in kind or any other purpose or advance loan to any person for the purpose of 
receiving interest thereon, nor shall carry on an interest based transaction in the 
Province. 
(2) Whoever contravenes the provisions of sub -section (1) shall be 
punished with imprisonment of either description which may extend to ten years but 
shall not be less than three years and shall also be liable to fine not exceeding one 
million rupees. 
 
4. Punishment for Abetment. – Whoever intentionally and willfully abets , 
engages, assists or aids the money lender in lending money or in recovery of interest 
or in interest based transaction in contravention of sub -section (1) of section 3 shall 
also be liable to the same punishment as provided in sub -section (2) of section 3 of 
this Act. 
 
5. Punishment for Molestation. – Whoever molests any b orrower or debtor , 
whether on his own behalf or on behalf of anybody else with intention to force such 
borrower or debtor to pay back any loan or debt or any part thereof or any interest 
thereupon, shall be punished with imprisonment of either description for a term which 
may extend to five years and shall also be liable to fine up to five hundred thousand 
rupees. 
 
6. Complaint.– A justice of peace shall, within three days on receipt of any 
application or complaint with regard to the commission of an offenc e under this Act , 
order the local police to register a case against such person or group of persons. 
 
7. Liability to pay interest on debt to stand extinguished. – On the 
commencement of this Act, every obligation of any debtor or borrower to pay interest 
on debt or such part of interest shall stand extinguished. 
 
8. Offences to be tried by Court.– No Court inferior to that of Judicial Magistrate 
of the first class shall try an offence under this Act. 
 
9. Cognizance of offences.– Notwithstanding anything to the contrary contained 
in the Code or any other law for the time being in force an offence under this Act shall 
be cognizable, non-compoundable and non-bail able. 
 
10. Adjustment of principal amount.– The trial court, if it is proved that the money 
lender committed an offence under this Act, shall order that the interest already p aid 
to the money lender is considered as payment towards the principal amount. 
Provided that where the amount of interest paid by a borrower e xceeds the 
principal amount, the court shall order the money lender to return such excess amount 
to the borrower. 
 
11. Recovery of sums.– Where penalty imposed on money lender under this Act 
or the amount ordered to be returned, is not paid– 
(a) the Court may order to recover the amount so pay able by selling the 
assets belonging to such person; and 
 
 
(b) in case the amount cannot be recovered from such person in the manner 
provided in clause (a) the Court may prepare and sign a certificate 
specifying the amount due from such person and send it to the collector 
of the district in which such person owns any property or resides or 
carries on business ; and the collector of the district on receipt of such 
certificate shall proceed to recover from the said person the amount 
specified in the certificate as if it is an arrear of land revenue. 
 
12. Appeal.– Save as provided, any person aggrieved by any decision given, 
sentence passed or order made by the trial court under this Act, may within thirty days 
of such decision, sentence or order prefer an appeal under the provisions contained 
in chapter XXXI of the Code. 
 
13. Power to deposit in Court money due on loan. – (1) Where any lender, 
whether a money lender as defined in this Act or otherwise, refuses to accept the 
whole or any portion of the money or other property due in respect of his loan without 
payment of interest, the debtor may deposit the said money or property into the Court 
having jurisdiction to entertain a suit for recovery of such loan and apply to the Court 
record full or part satisfaction of the loan, as the case may be. 
(2) Where any such application is made, the Court shall, after due inquiry , 
pass orders recording full or part-satisfaction of the loan as the case may be. 
(3) The procedure laid down in the  Code of Civil Procedure 1908 (Act No. 
V of 1908), for the trial of suits shall, as far as may be, apply to applications under this 
section. 
(4) An appeal shall lie from an order passed by a Court under sub -section 
(2) within thirty days excluding the time for obtaining a certified copy of the order as if 
such an order relates to the execution, discharge or satisfaction of a decree within the 
meaning of section 47 of the Code of Civil Procedure, 1908 (Act No. V of 1908). 
 
14. Act to override other laws, etc .– The provisions of this Act shall have effect 
notwithstanding anything contained in any other law for the time being in force or in 
any instrument having effect by virtue of any such law. 
 
15. Indemnity.– No suit, prosecution or other legal proceeding shall lie against any 
person for anything which is in good faith done or intended to be done in pursuance 
of this Act or of any rules made thereunder. 
 
16. Power to make rules. – Government may make rules for carrying out the 
purposes of this Act. 
 
17. Interpretation.– In the interpretation and application of the provisions of this 
Act, and in respect of matter ancillary or akin thereto, the Court shall be guided by the 
injunctions of Islam as laid down in the Holy Quran and Sunnah. 
 
18. Repeal.– The Pun jab Prohibition of Private Money Lending Act 2007 (VI of 
2007) is hereby repealed.