Hindu Law and Custom (Recht und Sitte) c8.74

c8.74

This extraordinary amount of interest is possible on account of the fact that the rate of interest is very high and according to a rule which M. 8, 140 ascribes to Vas. and which is actually found in Vas. 2, 51, the interest should be 1¼ per cent. per month, that is 15 per cent. per annum; but if the debtor belongs to the lower castes and in the case of insufficient security, it may rise to 5 per cent. per month, that is 60 per cent. per annum, what according to M. 8, 152 is the maximum. Debtors of higher castes should be favoured and the rates of interest decrease according as the debtor belongs to a high caste so that the Brahman has to pay only 2 per cent. per month in the case of loan without security.¹ If there is a particular risk, still higher rates may be charged; thus merchants who wish to travel through a wilderness should pay 10 per cent. and those who would make a voyage should pay 20 per cent. (Y. 2, 38) because in such loans even the principal is endangered (Mit.); generally any interest voluntarily promised should be paid by every man (Vi. 6, 3 etc.).