PROVISION OF BORROWING FACILITIES. 367 



Some adopt the so-called 'ballot* system, this simply decides the 

 question by lot. At first sight it would seem the best method as 

 avoiding favouritism and the cost of premiums, but it has been largely 

 abandoned in America in favour of the auction system, and the new 

 English Bill of 1893 expressly forbids it in all new societies, because, 

 apparently persons join societies merely to gamble for the lots, which, 

 if they win, they sell at a high price to those in need, thus realizing a 

 heavy profit which should have gone to the society ; in fact a society 

 seems to be often formed by a ring of speculators who gamble for the 

 subscriptions and share the profits. 



Interest. The interest in many Nidhis is high ; in some it is, prima 

 facie, unnecessarily high, but it must be remembered, in comparing 

 rates with those of money-lenders, (1) that all dealings are, in theory 

 at least, regular and clear and open to complete inspection and audit, 

 (2) that in loans payable by instalments counter-interest at the same 

 rate is allowed on all instalments, while sowcars, specially under the 

 ' kanthu ' system, allow no interest on instalments, (3) that all 

 borrowers of regular loans are necessarily subscribers who share in the 

 profits of the Nidhi, and thereby obtained a further set off against 

 the cost of their loans. For example, a loan of Rs. 100 is granted 

 at 6J per cent, repayable in eighty-four months (seven years) by 

 monthly instalments of Re. 1 each ; in these seven years the borrower 

 will have paid as interest (6J x 7) Rs. 43-12. But since he has 

 repaid his loan by the usual subscription of 1 rupee per month, on 

 which interest at 1 pie per rupee per month (6J per cent, per annum) 

 is allowed, he will be credited with -i*J_5 pi e s, equal to Rs. 18-9-6 : 

 hence for the accommodation of a lump sum of Rs. 100 repayable by 

 monthly instalments over seven years, he has paid about Rs. 25, if 

 interest upon interest is neglected. From this again is deducted his 

 share of the " additional profits" due to him as a member. 



Loan values. The maximum value of loans to a single person is 

 practically fixed by the number of shares he may hold, since each 

 share is for Rs. 50 or Rs. 100, and fifty shares is the general 

 maximum to be held by one man ; Rs. 2,500 or Rs. 5,000 is the 

 maximum loan. The minimum varies from Rs. 5 upwards. The 

 small loans are usually the special ( small lot } loans bearing high interest 

 and for short terms ; regular loans are not of less value than one share. 

 Purpose of Loans. This is stated generally as for payment of 

 prior debts, purchase, building or repair of houses, purchase of lauds, 



