History of Dharmashastra (Ancient and Mediaeval Religious and Civil Law in India) v4.c63.561.3

v4.c63.561.3

(498) provides that if a debtor himself stipulates a higher rate of interest than is allowed by the śāstra in times of difficulty (in order to induce the creditor to part with his money) that stipulated interest must be paid but a rate of interest imposed by the creditor otherwise (by force &c.) should not be enforced by the Court.⁶⁸⁶ It is probable that these rates are specified because of the economic conditions of those times which proved too much even for the ancient sages or different mercantile usages about interest prevailed in different countries at different times, as expressly stated by Nār. IV. 105-106 that⁶⁸⁷ these high rates (including eight per cent per month) had to be paid according to the law merchant in different countries. Manu VIII. 141 (=Nār. IV. 100) holds that to take two per cent per month (on unsecured debts) is not improper. In medieval times also the rate of interest was rather high e. g. interest at 25 per cent is said to have been charged on a deposit of six *gadyāṇas* kept with the *mahājanas* of Śivapura (vide Yewur Ins. in E. I. XII. p. 273). Yāj. II. 38 provides that those debtors who carry on trade by traversing dense forests and those who are sea-faring traders should respectively pay 10 per cent and 20 per cent per month and the Mit. adds that these exorbitant rates are allowed because of the great danger of the loss of even the principal as the debtors may perish by ship-wreck or from the attacks of robbers and wild beasts. Manu VIII.