₹2 on every ₹100 each month is 2% a month, which is 24% a year. ₹3 per hundred is 36% and ₹5 is 60% a year.

Simple interest = principal × rate × time ÷ 100. ₹1 lakh at 12% a year for 2 years earns ₹24,000.

With compound interest, each period’s interest is added to the principal and earns interest itself. Over long periods it grows much larger than simple interest.

Moneylenders often charge ₹2 to ₹5 per hundred a month, which is 24% to 60% a year. A bank, cooperative society or self-help group can often lend for much less.