348 PROVISION OF BORROWING FACILITIES. 



perfectly well that it would not pay their creditors to sue them in 

 Court, at a distance of perhaps 20 miles, for sums of only Us. 20 or 

 Us. 25, hence the bankruptcy of some such Unions. These Unions 

 are useful and legitimate, but when they are not sustained by village 

 authority, by the power which a local community or caste has over 

 its individual members, they are very apt to fail, for human nature 

 can seldom pass the chance of a good thing at another's expense if 

 there is practically no risk. 



The first Madras Fund (Nidhi) further developed the system; 

 about 1850 certain Court and other employes discovered that they 

 were being ruined by usurers, and determined to start a Fund to give 

 persons of fixed income a chance of borrowing at equitable rates. 

 The model selected was the English Building Society so-called. Why 

 this particular class of society was adopted, or who suggested it, is 

 not known, but it is clear from the rules and methods of the Nidhis, 

 which reproduce, in many cases verbally, the rules and conditions of 

 the English exemplars, that some keen-sighted man discovered the 

 suitability of the Building Society to presidency needs ; possibly the 

 original idea was actually to provide houses for subscribers. The first 

 Fund was a ' Terminating ' Society with a seven years' period; each 

 subscriber agreed to pay for eighty-four mouths, when the Fund 

 would be wound up and shares repaid at Us. 102i per 84 received. 

 From the collections loans were granted to members at 6j per cent, 

 interest with penalties for delay; the loans, repayable by the monthly 

 subscriptions, were usually on mortgage, and the order of granting 

 them was determined by lot; the cost of establishment was met from 

 the penalties and from a charge for commission. Branches were 

 subsequently started ; these were found expensive, and it was 

 determined to make the Fund permanent, that is, a new series of 

 subscribers were admitted and shares opened every year, and finally 

 every month, so that there was a continuous influx and efflux of 

 members and shares. 



The Fund continued in much prosperity and favour till 1872, and 

 many others were started in Madras in imitation of the original ; 

 some were genuine Mutual Societies, some were for the benefit of the 

 promoters and directors ; some adopted the practice of selling their 

 loans to the lowest bidder, so as to obtain high profits; some charged 

 10 or 15 percent, or other high interest on their loans ; as in the English 

 Loan Societies, a found principle was often abused for the sake of gain. 



