Understanding Tamasuk in Nepal: Types and Legal Aspects of Transactions

Tamasuk is a document that acts as proof of a monetary transaction done in mutual trust, especially when loans are issued without collateral. This written agreement becomes crucial in disputes, as it helps protect the rights of both lender and borrower. For example, if the debtor fails to repay on time, the creditor can recover the due amount from the debtor’s property as specified in the Tamasuk.

Essentials to Include While Drafting a Tamasuk

When writing a Kapali Tamasuk or any other form of Tamasuk, the following details must be included to ensure legal validity:

These details safeguard both parties and help avoid any legal ambiguity later.

Types of Tamasuk in Nepal

1. Kapali Tamasuk

This is a trust-based document where no collateral is kept. It’s the most common type of Tamasuk. If the debtor defaults, the creditor can still claim from the debtor’s property. If the interest rate isn’t clearly mentioned, the creditor can only legally demand up to 10% interest annually.

2. Dristi Bandhak Tamasuk

This type of Tamasuk involves mortgaging immovable property (like land or a house). The document is registered at the Land Revenue Office, but the lender does not take physical possession. If the borrower defaults, the lender can initiate legal steps to claim ownership of the mortgaged property.

3. Bhog Bandhak Tamasuk

In this case, the creditor is allowed to use the debtor's property instead of collecting interest. If the creditor enjoys the property, no interest is charged. If they do not, the debtor must pay 10% interest. However, no more than 10% of the property can be enjoyed by the creditor.

4. Lakhabandhak Tamasuk

This involves movable or immovable property as collateral, and the lender holds physical possession during the loan term. The ownership remains with the borrower. If default occurs, the lender has a right to recover the debt using the pledged assets.

Legal Limits on Interest Collection

Nepal’s law restricts unethical lending practices related to Tamasuk:

• No Compound Interest: If compound interest is charged, it will be deducted from the principal.

• Interest Exceeding Principal Not Allowed: The creditor cannot collect interest that is more than the borrowed principal amount.

• These provisions aim to protect borrowers from exploitation and excessive financial burden.

Repayment and Settlement Procedures

To make repayments and record them properly, follow these procedures:

• Upon full repayment, the creditor must return the original deed or indicate payment on its reverse.

• If the deed is missing, a receipt must be issued with payment details.

• For partial payments, the creditor must either record it on the deed or issue a signed receipt.

Validity Period of a Household Tamasuk

A Tamasuk executed within a household is valid for up to ten years. If a debtor repays or renews the agreement during this time, an additional ten-year period applies from the new date. A legal case filed within this time allows interest to be recovered as per court judgment.

Legal Enforcement and Remedies in Case of Disputes

If disputes arise over repayment or enforcement of a Tamasuk, legal remedies are available. The affected party can approach the court within the legally allowed period. If the court issues a judgment, the creditor is entitled to recover both principal and applicable interest as per the ruling.

Importance of Tamasuk in Nepal’s Financial Culture

Tamasuk plays a vital role in Nepal’s socio-economic environment, especially in informal credit transactions. It merges traditional lending practices with legal enforceability, ensuring transparency, accountability, and trust. When used properly, Tamasuk encourages secure lending and borrowing without requiring institutional financial intermediaries.