Harassment from non-Licensed money lender for repayment of money lent

Taken a loan of Rs.1,00,000/- in mid of year 2013 @ a interest rate of 4%, against a hand written letter as security, after 2 months he increased the interest to 6%, when I argued he harassed me for immediate repayment of principal amount and any delay will attract a interest rate of 3% everyday, I was helpless and agreed upon it, and was able to pay interest of 6% for only 3 months as I didn't had a stable income source. when I asked for relaxation in interest rate, he told me to pay 200/- every day as penalty, I was helpless I was able to pay only 3000/- per month, he added the interest+balance penalty[9000], to the principal amount and the interest burden started to grow compounding, this continued for next 2 years and finally one day he called me and said the outstanding principal amount is Rs 4,25000/- and told he will wave of 1,00,000/- and told me to pay a balance of 3,25,000/-, and till that asked me to pay 4000/- every month, till date I am paying it.