Section 31. Limitation on rates of interest.

(1) The State Government may, from time to time, by notification in the Official Gazette, fix the maximum rates of interest to be charged by a money-lender in respect of secured loan and unsecured loan. 1[Provided that, in the Scheduled Areas, the rates of interest to be charged by a money-lender shall be fixed by the Gram Sabha, which shall not be more than the maximum rates of interest fixed by the Government under this sub-section.] (2) No money-lender shall receive from a debtor or intending debtor any sum by way of compound interest on a loan advanced or intended to be advanced or any sum by way of interest at a rate higher than the rate fixed under sub-section (1). (3) Notwithstanding anything contained in any other law for the time being in force, a money-lender shall not charge or recover from any debtor, on account of interest, a sum greater than the amount of principal of loan whether advanced before or after commencement of this Act. (4) Notwithstanding anything contained in any other law for the time being in force, no agreement between a money-lender and a debtor for payment of interest at rates exceeding the maximum rates fixed by the State Government under sub-section (1) and no agreement in contravention of the provisions of sub-sections (2) and (3) shall be valid.