History of Hindu Mathematics: A Source Book v1.c8.s13.1

v1.c8.s13.1

**Interest in Ancient India.** The custom of taking interest is a very old one. In India it can be definitely traced back to the time of Pâṇini (*c.* 700 B.C.) who in his *Grammar* lays down rules validating the use of the suffix *ka* to number names in case of "an interest, a rent, a profit, a tax or a bribe given."¹ The interest became due every month and the rate of interest was generally given per hundred,² although this was not always the case. The rate of interest varied in different localities and amongst different classes of people, but an interest of fifteen per cent per year seems to have been considered just. Thus in Kauṭilya's *Arthaśâstra*, a work of the fourth century B.C., it is laid down: "an interest of a *paṇa* and a quarter per month per cent is just. Five *paṇa* per month per cent is commercial interest. Ten *paṇa* per month per cent prevails in forests. Twenty *paṇa* per month per cent prevails among sea traders."³ The *Gotama Sûtra* states: "an interest of five *mâṣâ* per twenty (*kârṣâpaṇa*) is just."⁴