History of Dharmashastra (Ancient and Mediaeval Religious and Civil Law in India) v4.c63.561.1

v4.c63.561.1

Bṛ. (S. B. E. 33 p. 319 verse 1) states⁶⁸¹ that the creditor should always advance a loan after taking an adequate pledge or a deposit (with a mutual friend) or a reliable surety and after committing the transaction to writing or making the loan in the presence of witnesses. The interest may be either stipulated (*kṛta*) at the time of the loan or not stipulated (*akṛta*), as indicated in Viṣṇu VI. 4. Yāj. II. 38 and Viṣṇu Dh. S. VI. 3 state the general rule that debtors of all castes may pay to creditors of all castes the interest settled by mutual agreement and the rate of interest stipulated may be with reference to an article pledged or with reference to a surety given or with reference to a debt totally unsecured. Though this was the general rule, Manu VIII. 153 and Bṛ. condemn taking even agreed interest if it exceeds the rates (to be specified below)⁶⁸² allowed by the smṛtis or taking the agreed heavy interest for more than a year or taking compound interest or more than double the principal or the capitalization of interest. The smṛtis lay down various rates of interest from different points of view. Gaut. XII. 26, Yāj. II. 37, Baud. Dh. S. I. 5. 90-91, Manu VIII, 140 (=Nār. IV. 99), Bṛ. (S. B. E. vol. 33 p. 320 v. 3), Vṛddha-Hārīta VII.