#66 tllO VISION OF BORROWING FACILITIES. 



preference being given in Madras city in the order named. In 

 Madras city mere personal security is strongly objected to and 

 in fact generally refused; it was deliberately stated in two large 

 societies, that in that city it is not safe, owing to the facilities for 

 bankruptcy ; no respectable person, it was said, will stand security 

 except for very short periods (three months) since the habit of evading 

 debt has grown up. In the margin of the rules of a large bank 

 which has collapsed, there is a pencil note by a director that the ruin 

 of the bank was due to loans on personal security. This is a 

 very unsatisfactory condition, but in rural parts this want of 

 confidence, these breaches of faith, do not exist to a materi; 

 degree. 



The method of repayment is that of the Building societies ; suppose 

 a man has one share payable in eighty-four months at Re. 1 per month; 

 a loan is granted to him for Us. 100 upon mortgage of a house worth, 

 perhaps, Rs. 150 ; this loan he repays simply by his ordinary monthly 

 instalments of Re. \plus interest; at the end of the eighty-four 

 months from the date of his entering the society, his share will, 

 as usual, be worth Rs. 102-8, and his debt is therefore wiped 

 off. If his loan is for Rs. 500 he must take five shares. Hence he 

 is able to pay off his debt by small monthly fractions a very useful 

 plan to those who -get monthly pay. 



Method of allotting Loans. Since nearly every member at least 

 three out of four of an ordinary Nidhi wishes to borrow, there is 

 much competition for loans. Most of the Nidhis seem to grant loans 

 according to priority of application ; a list is made, and members get 

 loans in turn, some Nidhis give directors power in case of pressing 

 need to allot out of turn. It is hardly necessary to remark upon the 

 possible results ; the winding-up reports show that officers' and 

 directors' friends are apt to obtain priority, and it is conceivable that 

 if much power is left to a secretary or ill-paid manager, those who 

 obtain his favoui* in any way, obtain undue priority. Moreover, with 

 the limited funds at disposal, those who are in the greatest need, must 

 frequently fail to get a loan in time to be of use. 



Some few Nidhis consequently adopt the auction premium* plan, 

 usually that in which the bidder offers a premium of so many rupees 

 for the loan, the highest bidder wins and the premium is deducted 

 from the amount of the loan, with the full amount of which he is, of 

 course, debited. 



