BANKING, TRADE AND COMMERCE

MONEY-LENDERS

As in other districts the money-lenders in Bhir district started their operations when people gradually changed over from barter to money economy. The early history of the money-lenders could not be traced in the absence of relevant records or documents. The census reports of the ex-Hyderabad State give some information about the money-lenders in general for the whole State of Hyderabad. The 1921 census report states that "Banking, money-lending, exchange and insurance are the principal occupations of a large number of people in Hyderabad. The preponderance of money-lenders in the rural parts is significant, as 71 per cent of them are in Marathwada. In the rural parts, money-lending and grain-dealing are so inseparably combined in one person that a co-operative society, however, well-financed, cannot cope with him".

"Money-lending, as a business, has always existed in these Dominions. Ancestral debt and constantly recurring small items of debt for food and other necessaries, for social and religious ceremonies, for seed, for bullocks, and for the Government assessment, are the principal causes of enhancing rural indebtedness. The need of the agriculturist for loans is, therefore, imperative, and the money-lender is the only person to satisfy it. He serves the village in a variety of ways, other than as a supplier of credit. He is usually a grain dealer and, as such, he doles out grain and helps people to overcome difficulties."

The report further adds "Money-lending as a calling is not followed by one caste. Persons from all the religions practised it. The Brahmanic Hindus alone represented 84 per cent of the total money-lenders in the State. Komatis were the leading money-lenders and many of them were in Marathwada.  Marwari money-lenders also numbered quite high in the State Lingayats, Marathas, Brahmans, Kapurs, and Banjaras come next in order in terms or number.

The debtor class consisted mostly of tenants or tenant cultivators and owed a large amount of chronic debt. The burden of indebtedness especially on the rural population had increased during the course of years. Easy loans were available from the money-lender but the repayment was made difficult by him. In the ex-Hyderabad State there was no legal provision for a long time to safeguard the interests of the debtors. It was, therefore, with a view to improve the unsatisfactory conditions of the debtors that the Dastur-ul amal Kharaj Dehendagaon or the Hyderabad State Money-lenders' Act was passed by the Nizam's Government, in 1349 Fasli (1939).

The money-lenders used to advance loans to the cultivators both in cash and in kind. In respect of loans advanced in kind the system of savai or duni was prevalent in some parts. Advances were also made against the securities of ornaments usually of gold and silver, mortgage of property such as houses and pledge of articles like utensils or of agricultural produce.

In 1921 there were 786 persons actually engaged in the banking and allied establishments, like money-lending, pawn-broking, etc., in Bhir district.

Generally, it was during the rainy season that money-lenders used to advance to the cultivator seed for sowing and money for the maintenance of his family. These advances were repaid after the harvest either in cash or in kind. The interest on them varied from 25 to 50 per cent in good years and 100 per cent or even more in bad years. When grain was cheap, the money-lender demanded payment in cash, when it was dear, he demanded it in kind. In the former case, the amount was calculated after considering the price of grain at the time of granting the loan which was invariably higher than that prevailing at the time of payment. The sown or growing crop was sometimes pledged or sold at a rate far below its estimated out-turn and value.

In the absence of any rules or regulations, money-lending business in those days suffered from certain major drawbacks. In the first instance, there was no uniformity in the rates of interest charged by different money-lenders in the district. The rates varied from six per cent to even more than 50 per cent depending upon the type of security offered. Secondly, the security, depended more upon the "personal" element than the adequacy of the security demanded for the advances made to clients. The security offered consisted of either the cultivator's land or his gold ornaments. Many times advances were made on the security of the standing crop or the coming crop in the field. But perhaps the most objectionable practice of the money-lender was the fraudulent keeping of the records of the contracted debts which Were manipulated to the disadvantage of the cultivators.

The Bombay Money-lenders' Act, 1946, is in operation in Bhir district from 1960. The implementation of the Act helped in checking the exploitation of the agriculturists in the district to some extent. However, more serious remedies are required to enable the cultivators to raise their standard and prevent them from taking resort to the money-lenders. The co-operative movement will go a long way in removing the drawbacks of the present system of money-lending. There is a proposal to entrust the work of controlling the money-lenders to the field staff of the co-operative sector. This would also help in eradicating the evil of agricultural indebtedness and establishing effective control over money-lending in the district. An additional step taken to improve the existing conditions is that under the instructions of the Registrar—General of Money-lenders, the accounts of moneylenders in the areas inhabited mostly by scheduled castes and scheduled tribes are carefully examined. The money-lending business underwent a number of changes following the implementation of the Money-lenders' Act, 1946. Some decrease has been noticeable in the number of money-lender since the Act came into operation. From 59 in 1959-60 it had dropped to 50 in 1963-64. This was due mainly to the restrictions placed by the Act on the money-lenders' business as also due to the availability of credit from co-operative societies and Government agencies in recent years. The Act allows them to charge interest at 12 per cent per annum on advances against promissory-notes and nine per cent per annum against pledge of articles such as ornaments, agricultural seeds, etc. (or nine per cent on secured and 12 per cent on unsecured loans). In some parts of the district, however, loans are advanced in kind and the systems of duni and savai are still prevalent. But over the large part of the district loans in terms of money are advanced against the security of ornaments, mortgage of property, pledge of utensils, agricultural produce, etc. The following table gives the financial operations of money-lenders in Bhir district for the period from 1959-60 to 1963-64. With the passage of the Gold Control Order it was found that the village money-lenders were not anxious to conduct the money-lending business as it was no longer a profitable business for them.

TABLE No. 1

Transactions of Money-lenders in Bhir District from 1959-60 to 1963-64

This Act proved to be a boon to the agriculturists. There were, however, some breaches in this Act. So far as technical provisions (under Sections 18 and 19) were concerned, money-lenders were given a chance for compounding of offences. As for contravention of non-technical provisions, prosecution cases were instituted against them.