Rule of Damdupat
The Rule of Damdupat is an ancient Hindu principle of debtor-creditor law related to interest.
The Rule: The total amount of interest that can be recovered at any one time cannot exceed the principal amount of the loan.
Purpose: It was designed to protect debtors from being exploited by usurious lenders and to prevent debt from spiraling out of control.
Modern Status: This rule is mostly obsolete in modern banking law, but it is still applied in some parts of India (like Mumbai) in private money-lending transactions among Hindus.
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