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Minimum interest rate

Querist : Anonymous (Querist) 22 September 2011 This query is : Resolved 
I have given some loan to farmers.Is there any provision of minimum or maximum Interest Rate which I can take from them?
Sailesh Kumar Shah (Expert) 22 September 2011
Specifically, there is no provision to say charging of interest rate.
If you are in the business of lending then you can charge:-

Minimum : as per your choice
Maximum : equal or nearby to bank interest rate.
Querist : Anonymous (Querist) 22 September 2011
I was asking this beacuse my lawyer told me that you can't charge them below bank interest rate. you have to charge them equal to more than bank interest rate.
As many lenders charge them with very high interest rate i wanted to help rural areas to charge at very less interest like
3-4% annually.
R.Ramachandran (Expert) 22 September 2011
Your lawyer has not guided you properly. Probably he himself might be ignorant on this aspect.
Any way, as already indicated by Mr. Shailesh, there is no minimum interest rate. Even if you charge '0' % interest that will also be acceptable. Therefore, if you want to 3-4% annually, really it is quite a good gesture from your end. You can do so.
prabhakar singh (Expert) 22 September 2011
Both Mr. Shailesh Kr. Shah and Mr.Ramachandran have rightly opined.
Raj Kumar Makkad (Expert) 22 September 2011
In addition to reply of Ramachandran, I also want to bring in your kind notice that Islamic Bank is working in various places in Kerala wherein there is no interest rate for loans or deposits. So which bank to follow and why?

You should obtain a license of money lender only then you should start disbursing of loans at your interest rates otherwise recovery shall become impossible in various matters and in that situation, you shall become unable to help some other needy persons.


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