Verse 8.151 [Limitation of Interest (kusīdavṛddhi)]

Sanskrit text, Unicode transliteration and English translation by Ganganath Jha:

कुसीदवृद्धिर्द्वैगुण्यं नात्येति सकृदाहृता ।
धान्ये सदे लवे वाह्ये नातिक्रामति पञ्चताम् ॥ १५१ ॥

kusīdavṛddhirdvaiguṇyaṃ nātyeti sakṛdāhṛtā |
dhānye sade lave vāhye nātikrāmati pañcatām || 151 ||

Interest on money-loans stipulated at one time shall not exceed the double; in the case of grains, fruits, wool and beasts of burden, it shall not go beyond the quintuple.—(151)

 

Medhātithi’s commentary (manubhāṣya):

‘Kusīda,’ ‘monetary loans’—the advancing of money for earning interest; or the money advanced may itself be called ‘Kusīda’; i.e., the money which is advanced with the idea ‘having advanced a small amount I shall get back a larger amount.’

The interest on such loans ‘shall not exceed the double—the creditor, having advanced the money to the debtor, shall receive from him only such an amount as may be the double of his principal.

“What the text says is that the interest should become ‘Double’; and this, along with the principal itself, should make the total amount received thrice the principal.”

It is not so; in the term ‘Dviguṇa,’ ‘double,’ the term ‘guṇa’ signifies part; and when we come to look out for a whole of which it would be the ‘part,’ it is the principal which, from the context, appears to us as the ‘whole.’ Hence when the text speaks of the ‘double,’ what is meant is the double of the capital advanced. To this end we have other Smṛti-texts—(a) ‘When there is delay, the capital advanced shall become doubled’ (Gautama, 12. 81); and (b) ‘The deposit is to be redeemed when the principal has become doubled’ (Yājñavalkya, Vyavahāra, 64).

‘Interest’ is paid in several forms:—(1) when coins are advanced, interest is paid in coins; (2) sometimes it is paid in the form of progeny; as in the case of female cattle; (3) sometimes in the form of the use of pledges, in the shape of cattle, land and the like.

The doubling of the interest is, according to some people, meant to pertain to those cases where the interest paid is of the same kind as the capital advanced; and the reason for this lies in the fact that it is only in such cases that the exact ‘double’ can be ascertained; while in the case of interest in the form of ‘progeny’ of animals, it cannot be ascertained whether the ‘doubling’ is to be computed by number, or size or measure; as in the case of such animals as elephants and horses, it is found that when they are bought or sold, their price depends upon their size; as a rule animals of larger size fetching higher prices.

“There is similarity of kind in the progeny also; the progeny of the cow is of the same species as the cow. So that there is no justification for any distinction as that into (a) ‘interest of the same kind’ and (b) ‘progeny.’”

The answer to this is as follows:—‘Sameness of kind’ does not depend only upon belonging to the same species; in fact it depends upon similarity of age, size and other factors. Hence the distinction is quite correct. Further, in the case of interest in the form of the use of deposits also, how would the ‘double’ be determined? And when cows and lands are pledged, the benefit derived from the use of the cow is in the form of milk, while in the case of land, it is in the form of fodder and other produce; so that in these cases also what sort of ‘double’ would there be? In actual usage it is found that if the principal gold is not paid, land continues to be used and enjoyed for hundreds of years. Says Yāyñavalkya (Vyavahāra, 90)—‘The pledge continues to be enjoyed so long as the capital is not paid off.’ [From all this it is dear that the limit of ‘double’ cannot he applicable to all cases.]

Our answer to this explanation of some people is as follows:—When what is asserted is the ‘doubling’ in regard to ‘interest’ in general, how can we restrict it to any particular kind of interest only? When the words of the text afford a certain meaning in a general form, we cannot restrict it to any particular case, unless there is some authority for doing it. As regards the argument that “there can be no doubling,’ in the case of progeny,”—ju st please make an effort to understand the matter: when an animal is pledged, its value is duly determined, and certainly the value of its progeny also could be similarly determined. Similarly in the case of the enjoyment of landed property also, when the fodder and grains become ripened, it can he easily determined when their value becomes equivalent to the principal.

Then again, the term ‘Guṇa’ (contained in ‘dviguṇa,’ ‘double’) signifies usefulness also. “in that case what is there that would be as useful as the principal?” It can always be found if a certain thing serves any useful purpose at all. And if the interest accruing he computed only at the price obtained from the sale of the grain and fodder produced from the land,—then also it would be possible for the interest to become equivalent to the principal,—even though there may be no exact equality of size and other details.

As for the ‘local custom’ that you have put forward,—that argument has been answered by yourself, when you called it ‘local.’ further, whenever there is any chance of customs being abandoned, it is Smṛti-texts that serve the useful purpose of affording the requisite check.

As regards the text—‘the pledge is enjoyed so long as the principal is not paid up,’—the phrase ‘so long as the principal is not paid up’ can he taken to mean ‘so long as it has not become doubled.’ In fact, with a view to reconciling it with other Smṛti-texts, it is best to take it in this sense. This has been fully explained by us elsewhere.

‘Stipulated at one time’—i.e., what has been fixed upon at one time, in eases of the renewal of the loan. ‘Stipulating’ means fixing; and what is settling by verbal contract is also fixing. The loan is renewed, when the principal has become doubled and is not paid up. Even after the principal has been doubled, if the creditor is willing to earn further interest on it, and the debtor also wishes to retain the money for the purpose of currying on some large business, he renews the deed, entering as principal, the former principal along with the accrued interest, and thenceforward it is on this principal that the interest begins to accrue. And in that case, the principal, even though doubled, continues to grow further.

It continues to grow also when transferred to another person; for instance, when the principal has become doubled and the creditor has need of the money and asks the debtor to pay, the latter takes him to a third party, and says^‘this man will make the payment for me in so many days’; and in this case during these additional days, further interest shall accrue. The third party in this case is not a ‘surety’ for payment, but only a ‘trustee,’ the man who actually does the payment. This is what has been explained by Ṛju to be the meaning of the debt being ‘transferred to another person.’

Or. ‘transference to another person’ may refer to the following transaction:—Even before the principal has become actually doubled, if the pledge is banded over to another person,—when the money with accrued interest has become doubled, then it is only right and proper that the pledge should be redeemed; but in this case it is taken away before the principal has reached the limit,—then, interest begins to accrue from that date, and the limit of ‘double’ shall be computed upon the total amount of the principal along with the interest accrued up to the date of the transference. That is, when the creditor, with the sanction of the debtor, hands over the latter’s pledge to a third party and receives his due from him, then the interest continues to accrue.

In both these cases (of ‘transference to another person’), before the doubling of the principal, the money-lender is, somehow or other, made to agree to receive payment from another person; or, ‘transference to another person’ may mean that case where the debtor takes a further loan from the creditor, but having to go away to foreign lands, transfers the loan by means of another document.

Ṛju however holds that, except in the case of the same debtor renewing the loan, no interest beyond the doubling of the principal can accrue. It is in accordance with this view that he has declared—‘In the case of transference to another person, there should be renewal of the deed, and the need for this we shall explain.’

Some people have held the following view:—“The rule laid down in the present text refers to a case where the whole amount of interest accruing during the year is paid at one time [this being the meaning of the phrase ‘sakṛdāhiṭā ]; whereas if all the interest that has fallen due is not paid off wholly, then it will go on accruing, even beyond the limit of ‘double the principal.’”

But in this explanation, neither the negative particle ‘na’ nor the term ‘āhita’ retains its real meaning. For if the interest accrued during the first year has been received, and at the end of the second year, the interest is again brought up for payment,—where would there be any chance of the principal becoming doubled?

“The prohibition of excess may apply to a case where the debtor brings up for payment the amount of the principal which has become doubled with accrued interest. Even before the principal becomes doubled, if the debtor is able to pay up the interest only, he can do so, and there can be no limit placed upon the principal to be accepted.”

This view also is nothing. When the debtor is ready to pay up, he deserves favourable consideration, and he should not be made to pay more; and if a debtor is forced by the king to pay up, it cannot be right to remit the excess in his case. Nor does the term ‘āhitā’ of the text mean this.

If the word is read as ‘āhṛtā,’ then the exact signification of the term ‘sakṛt’ would be doubtful; reason would be scattered to the wings, and the text would he a self-conceived one, and not the one propounded by Manu.

From all this it follows, that the most reasonable conclusion is as explained by us above.

In the case of grains and other things, it does not exceed the ‘quintuple’—i.e., five times.

Another Smṛti text lays down ‘quadruple’ in the case of grains:—‘In the case of gold, cloth and grains, the interest is to be double, triple and quadruple respectively’ (Nārada, 107). And the law on this point is as follows: If the moneylender has become reduced to poverty, and the debtor has become opulent with much wealth, having earned much wealth by means of the grain he had borrowed,—then the interest is to be five times; and in other cases it is to be only four times.

‘Sada’—stands for the fruit of trees,—‘grains’ being mentioned separately.

‘Lava’—stands, among northerners, for wool.

‘Beasts of burden’—ass, camel, ox and so forth.—(151)

 

Explanatory notes by Ganganath Jha

‘Smṛtyantare’—(Medhātithi, p. 967, l. 30)—see Yājñavalkya (2. 39 )—‘Vastradhānyahiraṇyānām catustridviguṇā parā’, and in Nārada (107)—‘Hiraṇyadhānyavastrāṇām vṛddhirdvitricaturguṇā.’

This verse is quoted in Mitākṣarā (on 2.39), which adds the following notes:—Capital invested for increase is called ‘kusīda’,—the increase thereof is called ‘vṛddhi’;—and this never goes beyond, exceeds, the double,—if it is the first original investment; in the case of the investment being one that has been transferred from one person to another, it can exceed the double,—as it becomes, in tins case, a fresh transaction.—If we adopt the reading ‘āhṛtā’ (in place of ‘āhitā’), the meaning would he that the amount cannot exceed the double only in the case where the interest is paid all at one time, and that in a case where it is paid by gradual instalments—daily, monthly or yearly,—it does exceed the double. It goes on—‘The rule applies to cases where the loan has been advanced in one instalment, and is also paid back in one instalment; in cases where the loan has been transferred to another person, or a fresh transaction is entered into by the same parties after certain additions and subtractions, the interest does go on accumulating even after the principal, along with the interest, has reached the amount which is double of the original principal.—On the second half of the verse it remarks that in the case of grains and roots and flowers and fruits, the quantity payable may become five times of the principal. It explains ‘śada’ as agricultural products, fruits, flowers etc.,—‘lava’ as the wool of sheep, the hair of the camarī cow find so forth,—‘vāhya’ as ‘bullocks, horses and the like.’ Interest on these cannot go beyond five times the principal.

It is quoted in Aparārka (p. 643), which adds that the term ‘sakṛt’ makes it clear that the amount can exceed the double, in a case where with the consent of the debtor the accrued interest is added on to the principal and a fresh transaction entered into. It adds that this applies only to transactions in gold.

It is quoted in Vyavahāramayūkha (p. 76), which adds that Vijñaneśvara and others have held that in a case where interest has been paid by instalments at intervals, the total amount of the amount to be paid ultimately may exceed the double.

It is quoted in Vivādaratnākara (p. 17), which adds the following explanatory notes:—‘Dhānye’, barley, vrīhi and the rest,—‘sade’, fruits and other products from trees,—‘lave’, wool of the sheep, hair of the Camarī and so forth, the etymological meaning being ‘what is shorn’, ‘lūyate’;—‘vāhye’, ‘what is driven’, the horse and so forth;—if any of these things is lent, on interest, like gold and silver,—the amount to be paid should not exceed five times the principal. It is just possible that some one may borrow a hundredweight of grains, or a hundred horses, on loan at the rate of 2 per cent interest;—such a debtor, even after a very long time, can repay only five hundred, not more. The present text lays down ‘five times’ as the limit in the case of grain; but Bṛhaspati has fixed this limit at ‘four times’; while ‘three times’ is the limit fixed by Viṣṇu, Marīci, Vaśiṣṭha and Hārīta. In view of these alternative limits, the decision in any particular case will have to be determined by the character of the debtor concerned, or the nature of the time, and consideration of scarcity or affluence.

This verse is quoted in Nṛsiṃhaprasāda (Vyavahāra, 18b);—in Smṛtisāroddhāra (p. 326), which explains ‘sada’ as the produce of cultivation, other than, corn,—e.g., fruits and other things,—‘vāhya’ as ‘bullock and the rest’,—and ‘lava’ as ‘wool and the like;—and in Vivādacintāmaṇi (p. 11), which says that at one transaction, in the case of gems and things of that kind also, the interest cannot go beyond the double;—that in grains etc. it can go upto fivefold; but in repeated transactions it can go beyond the said ‘double’; it notes the reading ‘sakṛdāhitā’; it explains ‘vāhya’ as‘bullock and the like’,—‘śada’ as ‘field-prodce’,—‘lava’ as ‘that which is lopped off’, i.e., wool, except that of the sheep.

 

Comparative notes by various authors

Gautama (12.31, 36).—‘If the loan remains outstanding for a long time, the principal may bo doubled; after which the interest ceases. The interest on animal-products, on wool, on agricultural produce, and on beasts of burden shall not increase more than the live-fold value of the object lent,’

Viṣṇu (6.11-14, 16, 17).—‘On gold, the interest shall rise no higher than to make the debt double; on grain, three-fold; on cloth, fourfold; on liquids eight-fold; on substances from which spirituous liquor is extracted, on cotton, thread, leather, weapons, bricks, and charcoal, the interest is unlimited; on objects other than those just mentioned, it may be double.’

Yājñavalkya (2.39).—‘For cattle and for women, the interest consists in the form of their offspring; in the case of clarified butter and other Rasas, the highest limit of interest is eight-fold; in that of cloth, fourfold; in that of grains, threefold; and in that of gold, double.’

Kātyāyana (Aparārka, p. 643).—‘The money-lender shall receive double the amount lent.’

Nārada (1.105-107).—‘There are special rules according to the local usages of the country where the loan has been made. In some countries the loan may grow till the amount of the principal has been reached; in other countries it may grow till it becomes three, or four, or eight times as large as the principal. The interest on gold, grain and clothes may rise to two, three, or four times the principal. On liquids, the interest may become octuple; of women and cattle, their offspring forms the interest.

Bṛhaspati (11.13-16).—‘On gold and other precious metals, the interest may make the debt double; on clothes and base metals, treble; on grain, it is allowed to rise to four times the original amount; and so on edible plants or fruits, beasts of burden and wool. It is allowed to make the debt quintuple on pot-herbs; sextuple, on seeds and sugarcane; and octuple, on salt, oil and spirituous liquor. Likewise on sugar and honey, if the loan he of old standing. On grass, wood, bricks, thread, substances from which spirits may he extracted, leaves, hones, leather, weapons, flowers and fruits, no interest is ordained.’

Śukranīti (4.5.631).—‘When the amount drawn from the debtor in the form of interest has reached twice the principal, then the King shall make the debtor pay only the principal and nothing more than that.’

Kātyāyana (Vivādaratnākara, p. 17).—‘For gems, pearls, corals, for gold and silver—and for agricultural products and for insect-products (silk, etc.),—the interest shall stop at double of the principal. For oils, wines, clarified butter, molasses and salt, it shall go up to eight-fold.’