THE RATE OF INTEREST PRESCRIBED IN MANUSMRUTHI
Money lending is considered as a sin in Manusmruthi. At the same time the practice of money lending is justified also.
According to Manu, there is no sin in charging an interest at the rate of 1.25%. It is also suggested as moral to charge interest at the rate of 2% from the Brahmins, at the rate of 3% from the Kshatriyas, at the rate of 4% from the Vaisyas and at the rate of 5% from the sudras.
Provisions were there, to lend money against the security of land, cows or yielding properties. When clothes or ornaments were received as securities, the lenders were not allowed to use such things deposited as securities by the borrowers. In case , they were used by the lender, there was no provision to charge interest on the loan amount.
The ownership on the securities of the borrowers were to be lost automatically in cases, they failed to regain the same within a period of ten years.
Provisions were there to remit the interest in regular instalments. Monthly, Quarterly, Half yearly, and Yearly remittances were allowed.Defaulters were permitted to renew the loan by paying only interest. Some restrictions were also there in charging interest. In no circumstances interests were allowed to exceed more than twice the loan amount on final settlement. But in some exceptional cases, five times of the loan amount were also permitted.
There were also restrictions against the cheap practices of exploiting the borrowers by charging interest on interest and other charges. In case, when the borrowers failed to repay the loan amount with interest in time, they were allowed to enter into new agreement or in the sale of the property on final settlement.
In case, when loans were given against personal sureties, the sureties were responsible to settle the loans if the borrowers failed to settle the same in time.
In cases, when the borrowers failed to clear the loan for want if financial sources, they were allowed to settle the same by compensating the amount by working under the lenders.
AN EVALUATION OF THE CREDIT SYSTEM PRESCRIBED IN MANUSMRUTHI
No civilised man can justify the negligence that Manu imparted on Sudras. The progressive rate of interest recommended by him on caste base is also beyond justification.
In this context, it is to be remembered that, Manusmruthi is a history of Ancient India also. Subjects like politics, civics, economics, banking etc. etc. are detailed as they were prevalent in the time. For a detailed evaluation of the smruthi, an analysis of the contemporary history of other world nations is also necessary.
In those days, slavery system existed in different parts of the world. In India the system was in the form of Chathurvarnya. The sudras were treated as slaves by their masters. but their cruelties were in a lesser degree than that of the cruelties imparted on slaves by the slave owners in other parts of the world
In chathurvarnya, the Brahmins who represented the high status groups were those who engaged in study, teaching,research works and so on. They were the intellectual groups of the society. They were also the advisers of the kings and administrators of the day. They always engaged in intellectual works. So they were provided with high remunerations and maximum reliefs.
The Kshatriyas represented those who engaged in the administrative functions, military and para military activities, maintenance of law and order and so on. They were the protecting groups. So they were also provided with high remunerations and so many reliefs.
The vaisyas represented those people who engaged in agriculture, industry, trade and commerce etc. They were the producing groups and hence they were also treated with respect, but their position was below the Brahmins and the Kshatriyas.
The social status of the Sudras was the lowest. They were treated like the slaves. They were provided with only the minimum requirements of life. Moreover, they were not allowed to acquire and accumulate wealth. Such a group normally require no credit facilities. Even though in exceptional cases, if required they were allowed to borrow. By charging the highest interest rate, the Sudras were discouraged from borrowing and indulging into unpleasant situations.
It is also to be remembered that, the Smruthi reveals historical facts also. Exploitation of the working class was a common phenomena existed in the then world. It was not an isolated social evil that existed in India alone.
Manu suggested and recommended a credit system suited to the then India. He was only an advocate and economist of the prevailing social set up- not a revolutionist.
Despite having certain demerits, the credit system developed by Manu reveals the financial management capacity of the Ancient Indians.
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