Moneylending is a significant part of the traditional and
contemporary Indian merchant families' economic activities.
Farmers must be allowed to borrow throughout the rest of the
year since they only make money after the harvest.
In current times, many farmers borrow from banks, but in the
past, these merchant families were their main source of funds.
Their interest rates typically mirrored the borrower's
credit worthiness: unsecured loans might have interest rates as high as 30 to
50% per year since there was a large risk of default, whilst loans secured by
collateral could have interest rates as low as 7%.
These moneylending merchants were financially tied to their
farmer-creditors to some level, with one giving capital and the other providing
labor.
Moneylenders couldn't reject loans to farmers after a
difficult year since it would eliminate any chance of repayment in the future.
See Christopher Alan Bayly's Rulers, Townsmen, and Bazaars,
1983, for more information.
You may also want to read more about Hinduism here.
Be sure to check out my writings on religion here.
