Indian Moneylenders at Work : Case Studies of the Traditional Rural Credit Market in Dhanbad District, Bihar

In spite of the relatively extensive network of government supported credit institutions private moneylenders continue to dominate the agriculture credit market scene. In 1951-52 nearly 70 per cent of all agriculture loans were given by traditional moneylenders. In 1961-62 though the share of co-operative agricultural credit had increased from 7.3 to 13.8 per cent private moneylenders still enjoyed the lions share of the agricultural credit with a substantial 46.6 per cent of all farming loans which meant continuance of the traditional dependence on the private moneylenders with his unscrupulous business practices. The book based on a detailed study of selected villages in Dhanbad district in Bihar enquires into traditional moneylenders and the resulting debt relations between them and the debtor-farmers. The debt relations may be either pure loan obligations or even personal dependency relationships as well as a combination of both forms. The author finds that the traditional credit market is dominated by large scale farmers-cum-moneylenders who also occupy high positions in rural administrative bodies. The exorbitant interest rates usually charged by them not only create debt obligations but also help establish dependency relations of a long-term nature. A description of actual form of debt relations is presented with samples of interest siphoning mechanism practised by moneylenders. The final part discusses the various traditional forms of transfer of property rights, which frequently are the inevitable outcome of previous debt commitments, and their detrimental socio-economic effects on small farmers. Part of the authors doctoral thesis, the book should be of great interest to scholars in the field of agricultural credit and other related areas.