BANKING TRADE AND COMMERCE

section ii- BANKING AND FINANCE: MONEY-LENDERS

In 1880, when Dhulia district formed part of Khandesh district, the financial conditions were more or less universal over the whole district. Except at Jalgaon. the district place, there were no banking organisations in the district. Money-lenders were the sole financiers catering to the credit needs of the people. Money-lending was practised by almost all those who could lay by some amount. The professional money-lenders, however, belonged to the commercial classes in the community. Of these the bankers or sarafs dealt with urban people and well-to-do husbandmen and the rest with the comparatively poorer classes of villagers. Besides professional money-lenders, there were also low assurers, who, for short periods, lent small sums at heavy rates of interest.

The money-lenders dealing with urban people and well-to-do cultivators used to keep a journal or rojkird and a ledger, khatavani, whereas those advancing loans to poorer classes kept only the baitha khata, where entries were made without being posted in the journal or day-book and all transactions were based on written bonds. The former sometimes kept two journals, a rough book for entering daily transactions and a correct book or mel for weekly and monthly transactions. Final settlement of accounts was made every year in the Divali days.

Interest was generally charged every month, its rate varying according to the personal credit of the borrower. The yearly rate varied from 9 to 24 per cent in smaller and from 6 to 12 per cent in bigger towns. Often grain for seed was advanced by moneylenders

Generally grain or money was raised by cultivators against the security of their land. It was raised also by Jalap, that is, by pledging or selling the sown or grown crop at a rate far below its probable outturn. Land mortgages were also very common in those days, and at some places the practice of raising money by mortgaging one's labour was also prevalent. Labour was generally mortgaged either to clear off old debts or to raise money to meet marriage and other expenses. The men who mortgaged their labour were known as yearlies, saldars, because their term of service used to last for one or more years. In mortgages of immovable property, such as houses and land, the rate of interest varied from twelve to eighteen per cent. Both town and village money-lenders often advanced grain and money for seed or for support to the cultivator's family during the rainy season.

In one way, the old money-lenders have contributed to the capital accumulation, in the district through their dealings. The old Gazetteer pointedly says, "Though the bulk of the Khandesh money-lenders were grasping and unscrupulous in their dealings, and being foreigners, took much wealth out of the district, their capital and their thrift and skill in money matters were of the highest value. Without their genius for hoarding and the pitiless pressure they put on their debtors, the bulk of the money that was yearly saved would never had been earned, or if earned, would have been spent in feasting and show".

The advances made by the money-lenders were repaid at harvest time, either in money or in kind, with the addition of fifty per cent to the sum advanced. The recovery of interest and principal was not very strict in a few cases and the money-lender always acted kindly in recovering his dues. In a number of cases, however, the greed and unfairness of the money-lender caused too much hardships to their debtors. Many of the husbandmen, hard-pressed for money were utterly in the money lender's power. Less was given to them than the sum entered in the bond; no receipts were passed for the instalments paid; and fresh deeds were drawn up and fresh charges made, of which the debtor had no knowledge.

In order to check these objectionable mal-practices the then Bombay State passed on the 17th September, 1947, an act known as the Money-lenders' Act. It declared money-lending without licence illegal; compelled the money lender to maintain cashbook and ledger in a prescribed form and manner; prescribed the maximum rates of interest to be charged by him and made molestation of debtor by creditor an offence. The Act also sought by special measures to protect the Backward Class People [For a detailed description refer to Jalgaon Gazetteer, p. 306 ].

TABLE No. 1

TALUKA-WISE DISTRIBUTION OF LICENSED MONEYLENDERS IN DHULIA DISTRICT (FROM 1949-50 TO 1963-64 AND 1971-72)

contd.

TABLE No.2

ADVANCES BY MONEY-LENDERS TO TRADERS AND NON-TRADERS IN DHULIA DISTRICT

TABLE No.2 -contd.

TABLE No.  2-contd.

TABLE No.  2-contd.

The Act at the same time benefited the money-lenders by revising the structure of interest rates as from 5th July, 1952. Accordingly the maximum rates of interest were raised from six to nine per cent per annum on secured and nine to twelve per cent per annum on unsecured loans. The provisions of the Money-lenders Act, thus organised the business of money-lending and put it on a legal and systematic basis.

The Act was applied to this district in 1947. The above tables No. 1 and 2 give the taluka-wise distribution of money-lenders in Dhulia district as well as the loans advanced by them to traders and non-. traders in the district.

The table No. 1 indicates that Navapur taluka has the largest number of money-lenders in the district, whereas in Akrani Taluka there are no money-lenders at all. The total number of moneylenders in the district shows a decrease. The debtors, a large number of whom are cultivators, can now secure loans from the Government in the form of tagai, which has reduced the demand for money from the money-lenders. A number of money-lenders, therefore, do not renew their licences, and stop their business as soon as the old dues are recovered. The money-lenders are also required to maintain complicated accounts in prescribed forms and to send statements in regard to every single transaction to the department concerned. There is also a substantial increase in loans by co-operative societies. All these factors have contributed to the diminution of the influence exercised by the money-lenders and in their number.

For example, where as in 1962-63 loans to non-traders and cultivators from licensed money-lenders amounted to Rs. 34,59,370, loans from the primary co-operative societies and tagai loans together amounted to Rs. 3,10,95,742.

Since the implementation of the Gold Control Order, gold as security for raising loans from the money-lenders, has virtually ceased to come forth. This also has largely affected the supply of funds from the money-lenders.

Bombay Agricultural Debtors Relief Act.

The proverbial agricultural indebtedness in India always adversely Affected her prosperity in the past. Whatever might have been the causes of this indebtedness, it is true that it continued to grow year  after year in the absence of any mechanism or legal enactment that could control it. The Deccan Agriculturists' Relief Act of 1878 was passed in order to reduce the volume of agricultural indebtedness by compulsorily scaling down the debts incurred by the agriculturists, but it failed in its purpose owing to certain of its inherent drawbacks. An Act known as the Bombay Agricultural Debtors Relief Act, 1939, was, therefore, passed. The aim of this Act was to reduce the aggregate indebtedness of genuine agriculturists so as to bring it reasonably within the compass of their capacity to repay.

The Bombay Agricultural Debtors' Relief Act of 1939 changed the definition of the term "Agriculturist" of the former Act which had brought into its fold not only the genuine agriculturists of the cultivator class, but also pseudo-agriculturists. Further, under this Act the term debtor was applied to an indebted person who was holding land and also personally cultivating it. His income from sources other than agriculture was not to exceed a certain maximum limit. Income from land got cultivated by tenants was regarded as non-agricultural income under the Act.

Bombay Agricultural Debtors Relief Act.1939.

The application of the Bombay Agricultural Debtor's Relief Act of 1939 was restricted to debts not exceeding Rs. 15,000. The rate of  interest in case of awards was not to exceed six per cent per annum or such less rate as might have been notified in that behalf by the Government or the rate agreed upon by the parties between whom the debt was originally incurred or the rate allowed by the decree in respect of such debts, whichever was lowest.

Bombay Agricultural Debtors' Relief Act, 1947.

The above Act was repealed and replaced by the Bombay Agricultural  Debtors' Relief Act, 1947. This Act was extended to the Bombay area of the State of Maharashtra except the city of Bombay. Under  the Act the debtor is an indebted person or an undivided Hindu family, which holds land used for agricultural purposes or has held such land at any time not more than 30 years before 30th January, 1940, which has been transferred in the nature of a mortgage without purporting it to be so. The debtor, moreover, should also be cultivating land personally for the cultivating season in the two years immediately preceding the date of the coming into operation of this Act or of the establishment of the Board concerned under the repealed Act. The restriction on his non-agricultural income as per the Act was placed at 33 per cent of his total annual income or Rs. 500, whichever is greater (40 per cent of the total income or Rs. 1,500 as the aggregate income of all the members, in case of an undivided Hindu family).

Under the provisions of the Act, if the debts payable are unsecured, they are to be scaled down pro rata to the paying capacity of the debtor. In case of unsecured debts, this is to be done only if the total amount of such debts, is more than sixty per cent of the value of the property belonging to the debtor. For the purposes of the Act the paying capacity of the debtor was deemed to be sixty per cent of the value of the property of the debtor. The court has to make an award after determining the amount of debts scaled down in the manner mentioned above. It has also to fix the amount of instalments in which the debts are to be paid. In no case, however, the annual instalments payable by the debtor should exceed his net annual income. The rate of interest as laid down by the Act shall not exceed 6 per cent per annum or such less rate as may be notified by the State Government or the rate agreed upon between the parties when the debt was originally incurred or the rate allowed by the decree in respect of such debt, whichever is the lowest.

Since the application of the above Act, there has been a considerable reduction in the amount of debt contracted in Dhulia district. The following table shows the administration of this Act and the amounts by which these debts have been reduced.

TABLE No. 3

ADMINISTRATION OF THE BOMBAY DISTRICT AGRICULTURAL DEBTORS RELIEF ACT 1947 DISTRICT DHULIA

TABLE. 3 -contd.

TABLE No. 3 -contd.

TABLE No. 3 -contd.

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