Moneylenders are an institution by themselves for a number of centuries past. Prior to the organisation of banking, institutions, moneylenders were the principal source of credit in the rural as well as urban areas. They used to lend money to the peasantry as well as to the business community.

The Nasik District Gazetteer published in 1883 gives a vivid account of the moneylending business in the past, which is reproduced below. "The well-to-do of almost all classes lend money. In villages to the south of the Ajanta range the moneylender is generally a Marwar Vani or a Shimpi. In towns moneylenders are of all classes and creeds; among the higher Hindus, Brahmans chiefly priests, and Gujarat and Marwar Vanis, and gold-smiths; among the middle classes, tailors, oilmen, and husbandmen; and among the lower castes, shoe-makers, Thakurs, and Mhars. In some cases, though the practice is against the rules of their faith, Musalmans, both Konkanis and men of good Nasik families, live by usury. Village headmen and rich cultivators frequently, but on a small scale, lend money and advance seed grain. Their better chances forrecovering their demands make them, perhaps, less exacting than other creditors and they are reluctant to have recourse to the civil courts. In other respects their practice differs little fromthe practice of professional moneylenders. Except bankers, who make advances only to persons of credit, moneylenders deal equally with towns people and country men, with the well-to-do and with the poor. The different classes of moneylenders tend to gather in certain places, the centre of the community being one of their relations or caste fellows who has succeeded in establishing a good connection with the people of the neighbourhood. Thus, in three or four Igatpuri villages, there is a wealthy colony of Vanis fromViramgaon in Ahmedabad; in Nasik there are similar centres of Shimpis and Pahadis; and in Sinnar there is a specially strong element of Brahman and Kunbi moneylenders.

"A Marwar Vani when he first comes is generally poor. He opens, a grain and grocery shop, and begins to lend money and advance seed. The interest on money or grain advances varies fromtwenty-five to fifty per cent in good seasons, and in bad years rises to a hundred per cent or even more, though the excess is seldom recovered in full. The Marwar Vani is repaid either in cash or in grain. If grain is cheap he demands payment in cash, and if grain is dear he demands payment in kind. Men of this class, after they have established themselves in a business sometimes retire to Marvar, but more often settle in the district, marrying with families of their own class, building or buying a house, and sending a relation to look after their affairs in their native land where they send a large share of their earnings.

"Fifty years ago there was great risk in trade, and traders and moneylenders made high profits. But at present, extension ofdealings and the opening of the field of competition have, reduced the general rate of profit, and the tendency, except when temporarily counteracted by special demand, as in a time of famine, is still in the direction of lower profits.

"Borrowers: Most classes of the community are at times forced to borrow. Few households keep their wedding and funeral charges within the limits of their available capital. Both among traders and cultivators the well-to-do can raise money on their personal credit. But, in most cases, when the loan is for a large amount, lands and houses have to be mortgaged or personal ornaments or other valuables pledged.

"As regards their position as borrowers there would seem to be little difference between husbandmen and craftsmen. According to their personal credit the well-to-do of both classes pay interest at from nine to twenty-four, per cent a year, and the poor and needy at from twelve to forty. When property is mortgaged or pledged the interest is some­what lighter. If gold or silver ornaments, the most convenient articles to pawn, are given, the yearly rates generally vary from six to eight per cent rising to nine or twelve when the pledge is land or other less saleable security. Specially high rates are charged to labourers and craftsmen attracted to the district by railway or other highly paid and fairly constant employment.

"Nine per cent is thought a good return for money invested in land. But to a non-cultivating moneylender land brings with it so many troubles, that it is by no means a favourite investment.

"Though usually charged by the month, in some running accounts interest is paid by the year and in others for some specified time.

"Account Books: Town or large village moneylenders usually keep a rough note book kacha kharda, a day book pakki kird, written up from the note book after the day's work is over, and a ledger khatavani, showing each persons account separately. Some also keep a bill book hundichi nakkalvahi, and a jangadvahi in which are entered articles sent for approval. Smaller moneylenders rarely keep any book but exact separate bonds for every advance, or more, frequently, several bonds for a single transaction even when the amount involved is small.

"Debtor's Dealings: When a peasant falls deep in debt and his creditors become importunate, he generally pledges his crop or field to the one of them who is most likely to give him fresh advance. In other cases the crop or land goes to the man who first gets a decree of the civil court and attaches. Moneylenders evade the law of limitation and keep their claims fresh by from time to time, exacting new bonds. They never write off the amount due as a bad debt. ……

“ Grain Advances: The lower classes of husbandmen, especially in the west, and most field labourers require advances of grain for seed and for food during the time their crops are growing, and some­times to eke out their living during the ploughing season. Such advances are usually repaid at harvest time. From twenty-five to fifty or 100 per cent more than was advanced is recovered….If repayment is not made the loan accumulates at compound interest.

"Land Mortgages: Though moneylenders seldom buy land, it is unusual for them to gain possession of it by foreclosing mortgages. Land mortgages are of two kinds: without possession, najar gahan, and with possession, tabe gahan. The details depend in each case on the terms of the deed. As a rule, in the more usual arrangement mortgage without possession, the owner continues to hold the land, and the interest of the mortgagee is limited to a lien on the property. In mortgage with possession the owner or some other man fills the land for the mortgagee who pays the Government tent, and in some cases has the land entered in his name in the village account books. In Sinnar and other parts of the district land is mortgaged to a large extent without possession."

This state of affairs continued, with a few changes, till 1945. The noneylenders used to adopt nefarious practices and to follow the most harsh and coercive methods in the recovery of loans fromthe borrowers. They stood a parallel to Shakespear's Shylock and were a-great stigma to the rural economy. The farmers unable to pay the interest or principal due to their extreme, poverty fell easy victims to the obnoxious practices of these usurers. The ignorant borrowers usually received less than the sum entered in the bond. Proper receipts were not furnished for the installments paid by the borrowers.  The jugglery of account books used to put the poor borrowers to great losses. Various exactions were carried out to exploit the farmer to the fullest extent and at times even to attach his most valuable possession of land.

The Agricultural Finance Sub-Committee under the chairmanship of the late Prof. D. R. Gadgil made the following observation in its report of 1945:

“While it is true that the moneylender is the most important constituent of the agricultural credit machinery of the country, it is not possible to justify many of his practices and the charges he makes for his services. Very often these charges are out of all proportions to the risk involved in the business and constitute only exploitation of borrower. Nor is agricultural economy of the country in a position to bear the strain of his extortion. The credit dispensed by him instead of contributing to the agricultural prosperity of the country serves as a serious drag on it."

Moneylenders Act of 1946: In order to relieve the indebted farmers and craftsmen of the rigorous and nefarious practices of moneylenders, the then Government of Bombay enacted the Bombay Moneylenders Act in 1946. The purpose of the Act was to give relief to the debtors and to regularise and control the moneylending business. The important ptovisions in the Act are given below:-

(1)     The State Government is authorised to appoint, Registrar General. Registrars and Assistant Registrars of Moneylenders for the purposes of this Act and to define areas of their duties.

(2)     Every Registrar is to maintain in his jurisdiction a register of moneylenders.

(3)     Moneylenders are not to carry on business of moneylending except for area under licence and except in accordance with terms of licence.

(4)     The Registrar or 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.

(5)     Every moneylender shall keep and maintain a cashbook and a ledger in a prescribed form and manner.

(6)     Every moneylender should deliver a clear statement to the debtor about the language, amount, security, etc.

(7)     The State Government was authorised to fix maximum rates of interest for any local area or class of business of moneylending in respect of secured and unsecured loans.

(8)     Molestation of a debtor by the creditor in recovery of loans was treated as offence and was to be penaIised.

(9)     Notwithstanding any law for the time being in force, no debtor who cultivates land personally and whose debts do not exceed Rs. 15,000 shall be arrested or imprisoned in execution of a decree for money passed in favour of a moneylender whether before or after the date on which this Act comes into force.

The Act was subsequently amended. The important amendments made were 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 moneylenders permitting them to submit quarterly statements of loans to the Registrar of Moneylenders. Further amendment was effected in 1955 by which moneylending without licence was made a cognisable offence. In the following year special measures were adopted for protecting the Backward Class people. Thus Registrars and Assistant Registrars were instructed to take special care while checking the accounts of moneylenders in respect of their transactions with the Backward Class people.

Rate of Interest: The regulations enacted by the Government were not entirely partial, to the debtors. In order to ensure a steady supply of credit from the moneylenders, the structure of interest rates was revised as from 5th July 1952. Accordingly, the maximum rates were raised from six to nine per cent per annum on secured and from nine to twelve per cent per annum on unsecured loans. The moneylenders were also allowed to charge a minimum interest of a rupee per debtor per year (if the total amount of interest chargeable according to the prescribed rates in respect of the loans advanced during the year amounted to less than a rupee. The moneylenders, however, did not react favourably to this revision of the structure of interest rates. As the Annual Administration Report of the Bombay Moneylenders Act, 1955-56, remarks: "Moneylenders as a class are naturally averse to being regimented into any system of maintaining accounts with the concomitant limitations of the lending rates of interest".

Under the Bombay Moneylenders Act, the moneylenders are required to obtain a licence from the Registrar of Moneylenders, and are subject to rules and regulations framed by him. The following table gives the statistics of licensed moneylenders in the district.

TABLE No. 1-NUMBER OF LICENSED MONEYLENDERS

(TALUKA-WISE)

Taluka	1958-59	1959-60	1960-61	1961-62	1962-63	1963-64	1964-65
Nasik	93	81	92	82	71	50	50
Sinnar	11	11	14	12	8	7	8
Niphad	31	32	32	34	32	28	27
Dindori	2	2	2	2	3	3	3
Igatpuri	23	21	20	21	21	19	21
Chandor	6	5	5	5	5	4	4
Yeola	23	23	23	21	19	19	24
Nandgaon	30	29	31	31	32	33	34
Malegaon	26	22	26	25	26	26	25
Baglan	10	10	9	8	9	9	2
Kalwan	2	2	2	3	4	4	2
Peint	Nil	Nil	1	1	1	Nil	Nil
Surgana	Nil	Nil	Nil	Nil	Nil	Nil	Nil
District Total	257	238	257	245	230	202	200

Table No.2 gives the figures of advances given by the licensed moneylenders in the district to traders as well as to non-traders.

TABLE No.2-TOTAL ADVANCES BY MONEYLENDERS TO

TRADERS AND NON-TRADERS

	1958-59	1959-60	1960-61	1961-62	1962-63	1963-64
Tra4en	1,22,155-81	19,83,711	15,21,193	13,71,784	5,50,919-06	8,28,818
Non-Traders	40,86,904-51	76,40,063	74,48,292	13,27,515	23,63,100-60	55,44,185