Exorbitant 30 % rate in Tamil film finance under legal lens

The Madras High Court has flagged the demand for a 30 % annual interest rate by film financiers as prima facie exorbitant and potentially usurious, prompting a formal review of its legality under the Tamil Nadu Prohibition of Charging Exorbitant Interest Act 2003.

- HD Bureau

The Division Bench of Justices S M Subramaniam and Mohammed Shaffiq made the observation while hearing a money-recovery suit involving actor Vishal Krishna Reddy and production house Lyca Productions.

Lyca Productions claims it cleared a loan of ₹21.29 crore originally owed by the actor to another financier, in return for the promise of repayment along with interest at 30 % per annum on a diminishing-balance basis.

When the actor failed to pay, Lyca approached the court for recovery and invoked rights over future film projects. The high court earlier ordered Vishal to deposit ₹15 crore as security and subsequently to pay the principal plus the steep interest. Court records show the loan agreement dated 21 September 2019 admitted by Vishal, and the financial claim including interest mounting to over ₹30 crore.