Damdupat (दाम दुपट, "double the money") is an old Hindu-law rule: the interest recovered at one time can’t be more than the principal, so a lender can’t recover more than double the loan at once. Some courts have applied it, and Maharashtra’s money-lending law and a 1934 law still in force in Delhi have similar caps.
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What is the damdupat rule?
The name joins two words: dam, money, and dupat, double. In Marathi it is written दामदुप्पट (dam-duppat), with the same meaning. The rule says that when a debt is recovered, the interest included at that time can’t be more than the principal. Put the other way, the most a lender can recover at one time is double the principal.
Most recoverable at one time = principal + interest (capped at the principal) = 2 × principal
Only the interest is capped. The principal itself stays payable.
So on a loan of ₹50,000, no more than ₹50,000 of interest can be claimed at one time, and the whole claim tops out at ₹1,00,000.
Where does the damdupat rule come from?
Damdupat comes from classical Hindu law, which limited what a creditor could take back to double the sum lent. In the colonial period courts went on applying it, but not everywhere. As Hindu law it was applied mainly in the town of Calcutta (not the rest of Bengal) and in the Bombay Presidency, and only in dealings between Hindus; Bombay courts held it was enough that the borrower was Hindu. It never applied in the Madras Presidency, and it was never a rule for the whole of India.
Because it grew out of personal law and old court decisions, whether it covers a particular loan today depends on where you are, who the parties are and what kind of loan it is. A calculator can show the numbers; only a lawyer can tell you whether the rule applies.
Is damdupat still the law in India?
It survives in statute in at least two places. The Maharashtra Money-Lending (Regulation) Act, 2014 says:
- A court can’t decree, as interest on a loan, more than the principal of the loan still due on the date of the decree.
- A money-lender can’t charge or recover interest greater than the principal, and can’t charge compound interest.
- The Act’s definition of a money-lender leaves out banks, RBI-regulated NBFCs and co-operative banks.
In Delhi, section 30(2) of the Punjab Relief of Indebtedness Act, 1934, which still applies there, stops a court from decreeing more than twice the sum actually advanced, less what the creditor has already received. The Delhi High Court has called it a codification of the old damdupat rule. The Act leaves out trade debts and debts owed to co-operative societies, SBI and scheduled banks. Punjab itself repealed the Act in 2016.
Other states have their own money-lending laws, with their own licences and rate limits. Don’t assume the Maharashtra or Delhi rule applies where you live; check your own state’s law.
Damdupat judgments: cases courts have cited
| Case | Court and date | What it said |
|---|---|---|
| Nobin Chunder Bannerjee v. Romesh Chunder Ghose | Calcutta High Court, 1887 | Damdupat applied in the town of Calcutta between Hindus, but not in the rest of Bengal. |
| Hukumchand Gulabchand Jain v. Fulchand | Supreme Court, 1965 | Quoted Colebrooke’s Digest: interest received at one time must never be more than enough to double the debt. |
| LIC v. Sham Surat Singh | Delhi High Court, 1981 | Section 30(2) of the Punjab 1934 Act, as extended to Delhi, puts the old damdupat rule into statute; applied it to a loan by LIC. |
| Mhadagonda Ramgonda Patil v. Shripal Balwant Rainade | Supreme Court, 1988 | Applied the rule to a mortgage from the old Bombay area as an equitable rule, and noted it never applied to Madras. |
| Syndicate Bank v. Induri Guravareddy | Andhra Pradesh High Court, 8 Dec 1997 | Held that the rule does not apply in Andhra Pradesh. |
| Central Bank of India v. Ravindra | Supreme Court, Constitution Bench, 18 Oct 2001 | On bank loans, noted that capitalised interest can be many times the sum advanced and that the rule of damdupat does not apply. |
| Shivcharan Gupta v. Raj K. Gupta | Delhi, 2010 | Quoted Mulla: interest paid before the suit can’t be added to the interest claimed in it. |
| Ramesh Kr. Aggarwal v. Metro Interio | Delhi commercial court, 31 Jan 2024 | Applied section 30(2) of the Punjab 1934 Act in Delhi. |
Of these, the most recent Supreme Court judgment is Central Bank of India v. Ravindra (2001), and the most recent decision is the Delhi commercial court’s in January 2024. Read the full judgment, or ask a lawyer, before relying on any of them.
When does interest reach the principal? A worked example
Say ₹50,000 is lent at ₹2 sekda simple interest on 1 January 2026, and nothing is paid back. Interest runs at ₹1,000 a month. It equals the principal after 100 ÷ 2 = 50 months, that is 4 years 2 months: on 1 March 2030, when interest due is ₹50,000.
| After | Interest due | Share of principal | Status | Claim if damdupat applies |
|---|---|---|---|---|
| 1 year | ₹12,000 | 24% | Below the cap | ₹62,000 |
| 2 years | ₹24,000 | 48% | Below the cap | ₹74,000 |
| 3 years | ₹36,000 | 72% | Below the cap | ₹86,000 |
| 3 years 4 months | ₹40,000 | 80% | Near the cap | ₹90,000 |
| 4 years | ₹48,000 | 96% | Near the cap | ₹98,000 |
| 4 years 2 months | ₹50,000 | 100% | Cap reached | ₹1,00,000 |
| 5 years | ₹60,000 | 120% | Over the cap | ₹1,00,000 |
Does compound interest reach the cap sooner?
Yes. When unpaid interest is added to the principal, interest earns interest and the total grows faster. For the same ₹50,000 at ₹2 sekda, total interest reaches ₹50,000 after 3 years 2 months 14 days with a yearly rest and 2 years 11 months 1 day with a monthly rest, against 4 years 2 months at simple interest. Maharashtra’s law doesn’t allow money-lenders to charge compound interest at all. See simple vs compound interest.
How do part payments affect damdupat?
In its classic form, the cap is applied to the amount due at one time, not to every rupee paid over the years. Payments in between change the picture:
- Paying interest regularly keeps unpaid interest small, so it rarely comes near the cap.
- A payment that also cuts the principal lowers the cap. Under the Maharashtra law the cap is the principal still due on the date of the decree, not the amount first lent.
Whether interest already paid counts towards the cap depends on which law applies and on the facts. Don’t rely on a general article for that; ask a lawyer.
What should lenders and borrowers do?
- Settle interest regularly. Pay or collect interest every month, or at least once a year, so unpaid interest never builds up towards the principal.
- Keep written records. Note every amount given and received with its date, and give or ask for a receipt for each payment.
- Agree the terms in writing. Write down the amount, the rate (for example ₹2 sekda), whether interest is simple or compound, and when it is due.
- Check where the loan stands. Our byaj calculator shows interest due against the principal with the full working, so both sides see the same numbers.
- Talk to a lawyer before a dispute. Damdupat, state money-lending laws, licensing rules and time limits for going to court can all change what is recoverable.
7 short answersDamdupat rule: interest above principal, answered
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What does damdupat mean in English?
Damdupat (दाम दुपट) literally means double the money: dam is money, dupat is double. As a legal rule it means the interest recovered at one time can’t be more than the principal, so a lender can’t recover more than twice the loan in one go. In Marathi, "dam duppat" also names money-doubling deposit schemes, which is a different thing.
Under which law or section is the rule of damdupat?
There is no single all-India section. Damdupat is a classical Hindu-law rule on debts, from texts such as Manu, applied by courts; it is not in the CPC or the Contract Act. Laws that write a version into statute include section 29 of Maharashtra’s Money-Lending (Regulation) Act, 2014 and section 30 of the Punjab Relief of Indebtedness Act, 1934, which still applies in Delhi (Punjab repealed it in 2016).
Does the damdupat rule apply all over India?
No. As Hindu law, courts applied it mainly in the town of Calcutta and the old Bombay Presidency, between Hindus, and never in the Madras Presidency. Today it matters mostly where a law has a similar cap: Maharashtra’s 2014 money-lending law, or in Delhi the Punjab Relief of Indebtedness Act, 1934 (Punjab itself repealed it in 2016). Check your state’s law, or ask a lawyer.
Can interest be more than the principal in India?
Yes, in most cases: there is no all-India cap on total interest. A ₹20,00,000 home loan at 8.5% for 20 years costs ₹21,65,731 in interest, more than the loan itself. A cap applies only where a law brings in damdupat, such as Maharashtra’s limit on interest in a court decree or charged by a money-lender.
Can a bank charge interest more than the principal?
Generally yes. In Central Bank of India v. Ravindra (2001) the Supreme Court observed that the rule of damdupat does not apply to bank loans, and Maharashtra’s 2014 law leaves out loans by banks. One RBI rule is similar: on short-term loans to small and marginal farmers, the total interest a bank debits must not exceed the principal. For a dispute, ask a lawyer.
Does interest already paid count towards the damdupat limit?
Under the classic rule, no: it limits interest claimed at one time, so interest paid along the way isn’t added. Some laws count it. In Delhi, the Punjab Relief of Indebtedness Act, 1934 (repealed in Punjab in 2016) caps a decree at twice the sum lent, minus everything already received. On a ₹50,000 loan where ₹36,000 of interest was paid over 3 years, that cap is ₹1,00,000 − ₹36,000 = ₹64,000.
When does interest equal the principal at ₹2 sekda?
At simple interest, after 100 ÷ 2 = 50 months (4 years 2 months), whatever the amount. At ₹1 sekda it takes 8 years 4 months; at ₹3 sekda, 2 years 9 months 10 days. With compound interest it comes sooner. Try any rate in the byaj calculator.