question_answer

Differentiate between moneylenders and indigenous bankers.

Answer:

Ans.     The following are the important differences between Indigenous Bankers and money lenders:

(i) Business of banking: The Indigenous bankers practice their banking business. Moneylenders business cannot be banking business in its true meaning.

(ii) Acceptance of Deposits: The Indigenous banker used to accept deposits on current accounts as well as fixed deposits (not permissible now). Moneylenders do not accept deposits but they simply lend money (own funds)

(iii) Security sought: Indigenous bankers supply finance only for productive purposes on a proper security such as agricultural goods, lands, etc. Moneylenders are prepared to lend money even without a proper security. They do not distinguish between productive and unproductive expenditure.

(iv) Rate of Interest: The rates of interest charged by indigenous bankers are moderate I and consistent with the market conditions. The rates of interest charged by the moneylenders are very high.

(v) Nature of Practice: Indigenous bunkers practice their business with accurate accounts and straight dealing with their customers. Moneylenders are known for their objectionable practices such as failure to issue receipts for part payments, maintaining false accounts, etc.

(vi) Relationship with customers: The relationship between indigenous bankers and their customers is always cordial. They include Shroffs, Seths, Chettis, Kothiwalas, Marwaris, etc. The moneylenders quarrel, harass and threaten their customers and in most of the cases they do not maintain friendly relations with their customers.