Legal Question in Banking Law in India

My question is on Money Lender.

Dear Sir/Madam, around 1 year ago i have taken money(on a interest of 5%) from a person with a promise to reback it as early as possible,but due some problem i cant able to repay him back the entire amount of Rs.1,30,000,but still i am paying Interest every month regulalry,but now that person is saying me to prepare a bond on 100rs. Stamp paper,but dont mention the interest in it.

My main question is it right to make such type of bond?


Asked on 12/03/13, 7:14 am

2 Answers from Attorneys
Vishwa Arya Arya & Co.

One cannot charge the interest at the rate of 5% and the same has been declared to be unfair trade practice by the Monopolistic Trade Practices Commission, New Delhi in one of its judgment (the exact particulars I do not have at this time). Once you have taken money, it is proper to write a promissory note but not bond. However the rate of interest should be mentioned in it. But certainly not 5% per month.

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Answered on 12/04/13, 3:18 am
J. Radhakrishnan independent Practice

The answer pf Vishwa Arya regarding rate of interest is wrong. You can execute a promissory note with interest at 5% p.a. which is legal. No need to go in for an expensive bond on Rs.100 stamp paer.

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Answered on 12/05/13, 8:38 pm


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