90 GRANT OF LOANS AND ADVANCES TO AGRICULTURISTS. 



that there is no good reason for a reduction of that rate, and would 

 ask the Governments of Madras, Bombay and Burma to consider 

 whether the rate at present charged in those Provinces might not, with 

 advantage, be raised to 65 per cent. 



4. Under the present rules it is usual to levy penal or compound 

 interest on overdue instalments, and the Irrigation Commission recom- 

 mend that such interest should be exacted only in very exceptional 

 cases. In this recommendation they are supported by several Local 

 Governments, and more especially by the Lieutenant-Governor of the 

 United Provinces, who points out that the failure to pay interest when 

 due must be owing either to contumacy or to poverty, and that in the 

 first case coercive process to enforce payment should be taken without 

 delay, and in the second the question is whether some remission should 

 not be granted, and not whether more interest should be exacted. 



c> ' 



The Government of India are unable to accept this argument without 

 modification, as, even when the delay is due to contumacy, it is 

 impossible, in practice, to levy the arrear at once, and it is equitable 

 that a delay so caused should involve a penalty, if only as a lesson in 

 punctuality. They agree, however, that Local Governments should be 

 prepared to remit or reduce compound and penal interest in cases in 

 which they are satisfied that the failure is due to inability to pay and 

 that the levy of such interest would be productive of hardship. 



5. Under most of the present sets of rules the maximum ordinary 

 term fixed for the repayment of a loan is 20 years. The Famine 

 Commission suggested that this period might be extended, and the 

 Irrigation Commission recommended that no maximum period for 

 repayment should be prescribed, or that the maximum term should be 

 fixed at 50 years, Local Governments being empowered to prescribe 

 maximum periods for different tracts and districts and for different 

 classes of works, having regard mainly to the durability of the work 

 for which the loan was granted. After full consideration of these 

 suggestions, the Government of India are of opinion that in the case 

 of ordinary improvements a twenty years' term for repayment is 

 generally sufficient for the following reasons. An examination of 

 interest tables drawn up to show the amount of the annual or 

 half-yearly instalments required to discharge, within different periods, a 

 loan of Rs. 100 at 6J or even at 5 per cent, will prove that, to extend 

 the period of repayment beyond twenty years effects no substantial 

 reduction in the amount of the annual or half-yearly instalment ; so 



