CHAPTER V. 



PROVISION OF BORROWING FACILITIES. 



[Despatch from the Governor-General of India in Council to the Secre- 

 tary of State for India. No. 7 (Revenue), dated 31st May, 1884.'] 



AGRICULTURAL BANKS. 



x- * * \y e hayg t ne h on our to submit, for your Lordship's 

 consideration, a copy of correspondence which has passed between 

 us and the Government of Bombay on the subject of establishing an 

 agricultural bank in the Deccan. 



2. The utility of similar institutions in Europe, America and 

 Australia is well known to your Lordship, and we understand that in 

 the British Colonies especially the progress of agriculture and the various 

 enterprises connected therewith have been much advanced by the 

 monetary assistance thus afforded to the cultivating and land- owning 

 classes. There are indications that India, no less than the countries 

 to which we have referred, suffers from want of loanable capital. 

 The rate of interest is extremely high even where the security is of 

 the best description, and the agriculturist when in need of money 

 for the most prudent purposes, has to pay so dearly for a loan that 

 it absorbs the profits of his business. The Deccan Ryots Relief 

 Act, the Jhansi Encumbered Estates Act, and other similar measures 

 of an exceptional character have tended to relieve the peasantry in 

 some localities of a hopeless load of debt ; but they have not enabled 

 the thrifty and industrious cultivator to obtain money for agricul- 

 tural purposes on easier terms or more equitable conditions. We 

 have endeavoured to meet this need in respect of loans for land 

 improvement by advances of public money under the Land Improve- 

 ment Act ; but this is not sufficient. The cultivator requires money 

 from time to time for other purposes, and it has been found that if 

 he can on]y borrow for one particular object from the Government, 

 he prefers to deal entirely with the money-lender who will lend for 

 all purposes. What is wanted, therefore, is a private bank which 

 will in a measure take the place of the village usurer, but which w T ill 

 ^ the same time be bounjl by the articles of its constitution to 

 restrict its dealings to the more solvent cultivators and to supply 

 capital at comparatively easy rates and on equitable conditions. 



