PROVISION Oi<' B01UIOWING FACILITIES. 363 



much of rural money-lending in this presidency is by the moneyed 

 classes rather than by Marwaris. Interest varies according to term 

 and bank ; 5 per cent, for ordinary deposits, 6 or 6J for twelve 

 months' deposits, are moderate rates, and 7i per cent, is not 

 uncommon; in some societies three months' deposits get 6 per cent, 

 and twelve months' deposits, 9 per cent. In one society charitable 

 deposits get 10J per cent. The ratio of deposits to capital is usually 

 small ; the highest proportion, with one exception, is one-fourth of the 

 nominal capital ; in many cases it is not above one-tenth to one- 

 thirtieth or even a much smaller fraction of the capital. No limit 

 to the aggregate amount of deposits is generally imposed by the 

 rules ; in one Madras case the deposits are three times the amount of 

 paid-up capital, but this is not an ordinary Nidhi, and is purely European 

 or Eurasian. The small proportion of deposits, considering the very 

 good interest paid and the apparent demand for loans is remarkable. 



No special security is offered for deposits ; the status of the 

 society plus the reserve, if any, and any amount still due upon the 

 shares, are the direct guarantees ; this latter approaches zero as the 

 shares approach maturity, and where a whole series simultaneously 

 matures, deposits have to be attracted by high interest. Deposits are 

 more readily attracted to societies which lend chiefly on mortgages 

 rather than on personal security ; depositors consider such a Fund 

 more solidly established and less risky than those where loans on 

 personal security are the chief feature, while the deposits themselves, 

 being lent on good mortgages, are unlikely to be finally lost. It is 

 probably the absence of material and solid guarantees for the repayment 

 of deposits which prevents their inflow ; the interest is far higher than 

 that of Government paper, and the directors of the bank are locally 

 well known ; high interest is evidently insufficient per se to attract 

 deposits. It is also certain that with substantial and permanent 

 reserve and other guarantees, deposits would be attracted not only in 

 larger iquantity but at cheaper rates ; with Government paper below 

 4* per cent., it is difficult to believe that 6 to 7^ per cent, is necessary 

 in Funds, if well managed, supervised, and guaranteed. A small loss 

 of interest on a good reserve would be far more than recouped by 

 cheap deposits. Another reason for paucity and dearness of deposits 

 is the necessary delay in repayments. 



The smallness and dearness of deposits, the want of definite 

 security for them, the difficulty of repayment in case of a run, and 



