Section 15th(6) in The Navy (Pay And Allowances) Regulations, 1966
(6)If an individual retains the advance without purchasing a conveyance beyond the period of one month, in contravention of the provisions of regulation 240, normal rate of interest shall he charged for the first month and for the period in excess of one month penal rate of interest shall he charged in the following manner, namely:(a)The period of one month prescribed by sub-regulation (2) of regulation 240 shall he a calendar month from the date of the drawal of advance.(b)The penal rate of interest shall be calculated on the balance outstanding for the actual period in excess of first month (including fraction of a month) and not on monthly balances.(c)The penal rate of interest shall be calculated in the manner prescribed in paragraph 243 (2) of General Financial Regulations, Volume 1.(d)When the period of one month prescribed under sub-regulation (2) of regulation 240 is extended by the sanctioning authority, the penal rate shall be charged with effect from the date following that on which the extended period expires.(dd)[ the penal rate of interest shall be the compound rate of interest and it would as merged with the principal at monthly intervals for the purpose of calculation of future rate of interest for the subsequent periods.] [Inserted by S.R.O. 9-E, dated 19th March, 1974](e)The following example shall illustrate the procedure to be followed, namely.-'A' was sanctioned an advance of Rs. 12,000 on 30th August, 1900 repayable in sixty monthly instalments of Rs. 200 each. He refunded Rs. 200 each on 1st September,1960 and 1st October, 1960. The interest shall be charged as under:
