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Loan And Lending Money For Interest In Ancient Hinduism


Borrowing and incurring debt (rna) was known in ancient Hinduism from the earliest recorded times. References to taking loan and professional lending at heavy interest is found in the Vedas.

The great grammarian Panini refers to the uttamarna (creditor) and the adhamarna (debitor) and calls the interest Vrdhi.

It is distinguished kuaida, which is condemned. Obviously, it is a technical term for the occupation of lending, and one who followed this occupation was called kusidika or kusidin. As he charged interest at a heavy rate, the lender, his family and his occupation were looked down upon. The heavy interest was known as Kusida.

Brihaspati also condemns kusida taken from a wretched and suffering person.

The term kusida is found in the Taittiriya Samhita and kusidin in Yaska’s nirukta.

Another popular word for those living on lending was vardhusika, which was derived from vridhi (interest).

Being an economic activity, it was the normal occupation prescribed for the vaishyas, but in emergencies, when living by prescribed means was found impossible, even Brahmins and kshatriyas were allowed to earn their livelihood by resorting to vaishya occupations, including money-lending.

The rate of interest varied according to the circumstances and personal standing of the lender and borrower.

Panini condemns the lender who charged two or three-fold the original loan by extortionist tricks, but the normal rate of interest was much lower. It ranged between 24% and 100% per annum in the case of individuals. Guilds often paid interest at the rate of 9 to 12 percent, depending upon their prestige and standing, sometimes in the same locality and occupation, as we learn from a Nasik inscription of Saka Usavadata.



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