BANKING TRADE AND COMMERCE

MONEY-LENDERS

It is difficult to trace the origin of money-lending business in Wardha district for want of any records. The practice of money-lending could be said to have been formally started when money was adopted as a medium of exchange. Before that most of the transactions were in barter. Money as a medium of exchange conveniently facilitated the transactions and increased the mutual exchange transactions. The principal moneylenders of the earlier times were Agarwals or Banias and Brahmins. Other castes, too, followed money-lending but their number was small. Besides, many of them were the agents of the money-lenders residing in Nagpur district. Some of these made loans only to their own tenants. A large number of money-lenders, however, made loans to all tenants. Their dealings were both in cash and kind.

The debtor class was formed both of the proprietors as well as the cultivating tenants. About 26 per cent of the proprietors were actually in debt. This proportion was considered to be a high one at that time. The reasons for indebtedness were want of thrift, extravagant expenditure on marriages and litigations. The proportion of indebtedness, however, was not serious as one-third of the proprietors owed sums not exceeding Rs. 300. As regards the tenants class, out of nearly 40,000 tenants over 15,000 or 39 per cent were indebted. Although the position of tenants could not be favourably compared to the proprietors only a small proportion of the whole number was seriously involved. It is, however, very difficult to realise the exact extent of indebtedness, as the debtor was used to borrowing money from a number of creditors as was the common practice everywhere.

Rates of Interest charged by old money-lenders.

The rates of interest charged for private loans were very exorbitant, especially for petty cash loans. On large loans interest was paid at 12 to 24 per cent per annum, but on small ones 25 per cent would be charged for a period of three or four months. Such small advances were especially made to petty cultivators by money-lenders from northern India called Rohillas. Some of these were settled in large villages and carried on dealings in the neighbourhood. They either lent money or sold cloth at exorbitant prices, realising their debts by threats of violence and seldom having recourse to the civil courts. The practice of giving loans to be repaid in grain or cotton at a fixed rate at harvest was called lawani. It was very disadvantageous to the tenants. It was most common in the case of cotton crop, as it was advantageous to the dealers to secure their supply before hand. This system was almost in vogue in the Arvi tahsil, but gradually declined as the tenants became more intelligent and realised the loss they sustained. The rates of interest for cash loans varied from 6 to 9 per cent when jewellery was pledged and from 6 to 12 per cent on the mortgage of land according to the stability of the borrower. On grain loans advanced for seed or for subsistence while the crop was under culture and repayable at harvest, the rate was usually 25 per cent and for linseed 50 per cent. Even juar was lent at 25 per cent. In the case of cotton if a loan of 18 seers of cotton seed was taken, the payment was 9 seers of uncleaned cotton at harvest. This was a very high rate, but the transaction was small and the seed might be hand-ginned. A large number of tenants then kept their own seeds, or at least the autumn grains required for seed and for their subsistence and borrowed only the seed for the spring grains.

Malpractices of Money-lenders.

In the absence of any legislative or statutory control over the moneylenders in the district or for that over the entire Vidarbha region of which Wardha district formed a part, the position of the debtors deteriorated beyond degree and the money-lenders sought every opportunity to deceive them. The money-lenders adopted all sorts of malpractices in dealing with the debtors, especially the cultivators and agricultural tenants who were uneducated. The malpractices included (a) demand for advance interest, (b) demand for a present for doing business, (c) taking of thumb impression on a blank paper with a view to inserting any arbitrary amount at a later date, if the debtor becomes irregular in payment of interest; (d) insertion in written documents of sums considerably in excess of money actually lent and (e) taking of conditional sale-deeds in order to provide against possible evasion of payment by the debtor.

In order to put a stop to the malpractices of money-lenders mentioned above and to reduce their influence on the rural economy the then Government passed an Act known^as the Central Provinces and Berar Moneylenders Act of 1934. The Act was made applicable to all the persons in Vidarbha region who intended to carry on money-lending operations. It was in operation till 1956, when subsequent to the reorganisation of the States, Wardha, along with the other districts in Vidarbha was merged with Maharashtra.

Bombay Money lenders Act of 1946.

The Bombay Money-lenders Act of 1946 was accordingly applied to it along with the other districts in Vidarbha and Marathwada regions. The Act came into force from 1st February 1960 in Wardha District.

Under the provisions of the Act the State Government is authorised to appoint a Registrar-General, Registrars and Assistant Registrars of Money-lenders for the administration of the Act and to define areas of their duties. Every Registrar is to maintain a register of money-lenders in his jurisdiction. The money-lenders are compelled to take out licences for carrying on their business of money-lending. The Registrar, the Assistant Registrar or any other officer by this Act may require any moneylender to produce any record or document in his possession which is relevant for his purposes. Every money-lender has to keep and maintain a cash-book and a ledger in a prescribed form and manner. He has also to deliver a clear statement to the debtor about the language, amount, security, etc. of his transactions. The State Government is authorised to fix maximum rates of interest for any local area or class of business of money-lending in respect of secured and unsecured loans. The moneylender is prevented from molesting the debtor while making a recovery of his dues. In fact molestation is treated as an offence and is penalised. It is also "laid down that no debtor who cultivates land personally and whose debts do not exceed Rs. 15,000 will be arrested or imprisoned in execution of a decree for money passed in favour of money-lenders whether before or after the date on which the Act comes into force.

The Act was amended subsequently, the important amendments being the introduction of 4-A and 5-A forms and the pass book system, provision of calculating interest on katmiti system and facilities to certain classes of money-lenders permitting them to submit quarterly statements of loans to the Registrar of money-lenders. The Act was amended once again in 1955 when money-lending without valid licence was made a cognisable offence. In 1956 special measures were taken to protect the interest of the Backward class people. Accordingly, the Registrars and Assistant Registrars were instructed to take special care while checking the accounts of money-lenders in respect of their transactions with Backward class people.

At the time the Bombay Money-lenders Act of 1946 was made applicable to Wardha district, i.e., in 1959-60 there were 400 licensed moneylenders in the district. By 1964-65 their total number decreased to 276. This may be due partly to the fact that during recent years the debtors who were mostly agriculturists were offered enough financial accommodation by the Government in the form of loans and subsidies. Increase in the number of banks or their branches and the consequent expansion of their business have also provided facilities to the traders and businessmen to secure the required credit. The legal restrictions imposed on the money-lenders, on the other hand, have deterred a number of them from either renewing their old licences or applying for fresh ones. The following table gives the tahsil-wise information of money-lenders in the district from 1st August 1959 to 31st July 1965.

TABLE No. 1

TAHSIL-WISE DISTRIBUTION OF MONEY-LENDERS IN WARDHA DISTRICT, FROM 1ST AUGUST 1959 TO 31ST JULY 1965.

The total amount of advances granted by money-lenders to both the traders and non-traders in the district during the period mentioned above is given below:—

TABLE No. 2

TOTAL ADVANCES BY MONEY-LENDERS TO TRADERS AND NON-TRADERS
IN WARDHA DISTRICT.

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