Usury in Medieval India

Author(s): Irfan Habib

Source: Comparative Studies in Society and History, Vol. 6, No. 4 (Jul., 1964), pp. 393-419
Published by: Cambridge University Press
Stable URL: http://www.jstor.org/stable/177929
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 USURY IN MEDIEVAL INDIA

By convention the medieval period of Indian history is supposed to begin

either with the death of Harsha, c. 648, or, as in this study, with the Turkish
conquest of Northern India (about the beginning of the 13th century), and to
end on the eve of the British conquests (about the middle of the 18th century).
Although this sets a very late date for the close of the Indian medieval period,
the arrangement is not illogical, since it was only with the British conquests
that India became subject to the modern capitalistic system. But if we can
say with certainty that the society of the period previous to British rule was
not capitalistic, it is yet not a simple matter to define its basic elements. It
is no longer possible to accept the assumption that its economy was based
primarily on production for use, and not exchange, and that commodity
production and money economy are entirely a gift of British rule. There are
in fact strong grounds for supposing that the cash nexus was established in the
central parts of the Dehli Empire as early as the beginning of the 14th
century; 1 and there is overwhelming evidence at hand to suggest that over
large parts of the Mughal Empire (16th and 17th centuries), the land-revenue,
which comprised the bulk of the peasant's surplus produce, was collected in
money and not in kind.2 From such wide use of money, we should naturally
infer the prevalence of money-lending and credit on a large scale.
The chief object of the present study is to test this inference by examining
the actual evidence from the period relating to usury. The term "usury"
has been employed here in the same sense as is sanctioned by usage in
writings on medieval European history, namely, lending at interest, whatever
the rate or the form of extracting it. We propose to examine the extent of
usury, and the various forms in which it was practised, in the different sectors
of medieval Indian economy, as well as the ways in which different classes
of medieval Indian society were affected by it. It should, however, be con-
fessed at the outset that our information does not come uniformly from the
entire period, but comes in the larger measure from the 17th century alone.
Moreover, it is full on only some aspects of the subject while being fragmen-
tary or even non-existent on others.
1 Cf. W. H. Moreland, The Agrarian System of Moslem India (Allahabad reprint of
1929 ed., n.d.), pp. 11, 114, 136-7.
2 See
my Agrarian System of Mughal India (Bombay, 1963), pp. 236-39.
394 IRFAN HABIB

Agricultural and Rural Usury

Of key importancein any assessmentof the general prevalenceof usury

would be a knowledgeof the extent of its penetrationof the agrarianecon-
omy. On this the evidence is undoubtedlylimited, but such as it is, it does
suggestforcefullythat peasantindebtednesswas not by any meansunknown.
A work on land-revenueadministration,writtenin Bengal just before the
British conquest,notes that the peasantsfell into debt "mostly"because of
the need to pay the land-revenueor to meet the additionaltax-levies, and
"occasionally"in order to replace draughtcattle, to observe the rites of
marriageand bereavement,or to meet the expensesincurredin prosecuting
disputesamong themselves.sThat the land-revenuewas the principalcause
of the peasant'sfalling into debt, can be readily understoodseeing that it
generally amountedto a third or half of the total produce of the land.4
Moreover,it was not only in lean years that the peasantmight find himself
withoutresourcesto pay the revenue:It appearsthat, in the 17th centuryat
least,paymentof revenuewas occasionallydemandedeven before theharvest
could be collected.5A specimendocumentpreservedin a late 17th century
text-bookon accountancyshowshow an entirevillage-community of peasants
might have to borrowmoney in order to pay land-revenue.This document,
which is a summarystatementof the financesof a villagefor the year 1696-
97, shows that from the amount collected in rates levied upon individual
peasants,a sum of Rs 160, annas 9, was paid into the treasurytowardsthe
land-revenuefor the year, and about half as much (Rs 80) was set aside for
"repaymentof loan from the mahajan(professionalmoney-lender)".6Ob-
viously,the loan from the mahajanhad been taken up by the villagein some
previousyear to meet the land-revenuedemandfor that year. This is a case
of collectiveindebtedness,but it is certainthat individualpeasantsalso fell
into debt; and many of them owed everythingthey had to the money-lender.
Thus a farman (imperialorder) issued by Aurangzeb(1659-1707) a little
before 1684, had to providefor the exemptionfrom the poll-taxof "thepoor
peasants(reza ri'aya),who engage in cultivation,but are wholly in debt for
their seeds and cattle".7
3 Anonymous, Risala-i Ziridat (c. 1750), MS EdinburghNo. 144, f. lOb.
4 For the
magnitude of the land-revenue demand in the 16th and 17th centuries, see
my Agrarian System of Mughal India, pp. 190-96. During the 14th century, 'Alauddin
Khalji (1296-1316) is said to have taken half of the produce as revenue (Zia'u-d Din
Barani, Tarlikh-i Firiz-shdh7, Bib. Ind. ed., p. 287).
5 My Agrarian System of Mughal India, pp. 241-2.
6 Nandram, Siyaqnama (Lucknow, 1879), pp. 77-79. This work was written in the
Ilhabad (Allahabad) province and, therefore, probably represents the conditions there,
although its documents purport to come from a fictitious district in Kashmir. The Rupee
in Mughal times was of practically pure silver, and weighed 178 or 180 grains. 16 annas
made a Rupee.
7 The farmdn is
reproducedby "Malikzada"in Nigirnama-i Munshi (Lucknow, 1884),
 USURY IN MEDIEVAL INDIA 395
The burdenthat usuryimposedon the peasantcould not have been light;
and Aurangzebin his farmanwas probablycorrectin equatingthe degreeof
a peasant'sindebtednesswith that of his pauperisation.The 18th century
work from Bengal, which we have quoted above, says that sanyiiss (men-
dicants) and Baksariyas(infantrysoldiers and "clubmenof zamindirs")8
usually engaged in money-lending(mahajan) in the Bengal villages; and
that they lent nominallyat 11/2 annas in the Rupee (1 Rupee - 16 annas)
per month, but actually,by certaindevices, obtaineda gain of 2 annas per
month, i.e. 150% per annum at the simple rate. The loan was usually ad-
vancedfor a period of two or three months;and if not repaidwithinit, the
interestdue was addedto the principal,and a fresh bond extractedfrom the
borrower."Thus,constantlytakingcompoundinterest",says our work, "they
(the usurers)bring about the ruin of the peasantry"."
Besides simple money-lendingother forms of usury also prevailedin the
villages,forms in which credit appearedin close associationwith commerce.
Sometimes,it is said, the loan was given in cash, but repaymentdemanded
in kind;and the usurercould then enhancehis gainby fixingthe rate of com-
mutationand under-weighingthe corn received.'0This statementrelates to
18th-centuryBengal, but the practiceseems to have prevailedextensivelyin
the Agra region duringthe 17th century.Here indigo merchantsadvanced
money to the peasantsand took repaymentin indigo,fixing the rate before-
hand. This, in 1614, was reportedto be "a custom and the cheapestcourse
of buying";" and, to judge from one recordedinstance, the differencebe-
tweenthe contractrateandthe marketpricecouldbe quitesubstantial.12 From
17th-centuryGujarat comes evidence of a still more complexform of usury.
Here we are told of brokersof Surat,"who drive the same trade of giveing
out old worme eaten decayed corne in the severall neighbouringvilladges;
which they take out in (cotton)yarne".l3This practicewould have provided
the creditorwith double means of makinghis gain, by inflatingthe rate of

p. 139, a collection of documents compiled in 1684. The jiziya, or poll-tax on non-

Muslims, from which the farmin grants exemption, was imposed in 1679.
8 Cf. William Irvine, The Army of the Indian Moghuls (New Delhi, 1961),
p. 168.
9 Risala-i Ziraiat, MS Edinburgh 144, ff. lOb.-lla.
10 Ibid., f. lla. A slightly later work, Yasin's Glossary of Revenue Terms, written
in the later half of the 18th century and based on the author's experience of Dehli and
Bengal, defines a practice called bai -i salam as follows: "The grain has not yet appeared
in the field, but a man purchases it, and then seizes the grain when it appears"(Br. Mus.
Add. 6603, f. 50a).
11 Letters Received by the East India Company from its Servants in the East, ed. W.
Foster, II, p. 106. Cf. Pelsaert, 'Remonstrantie',tr. Moreland and Geyl, Jahangir'sIndia
(Cambridge, 1925), p. 16.
12 In 1627, the English East India Company bought Biana indigo at Rs 35 to 361/2 per
maund, except for 'a small parcel bought green in the villages "by mony advanced
beforehand", which cost only 241/2 rupees' (The English Factories in India, 1625-29,
ed. Foster, p. 208).
13 English Factories, 1661-65, p. 112.
396 IRFAN HABIB

corn advanced to the villagers as well as underrating the yarn brought by

them in repayment.
The need of the peasant for resources and the evidently high cost of
borrowing money from private sources led the medieval State to offer credit
to the cultivators from its own resources. It is not surprising that the State
should have begun to assume this role in the first half of the 14th century.
Under 'Ala u-d Din Khalji (1296-1316) the claim of the State to deal directly
with the peasants and to take nearly the whole of the surplus produce was
for the first time asserted. The State thereby not only drew an immense in-
come so as to command enormous monetary resources, but its revenues also
began to vary in close association with the fortunes of cultivation. Until the
reign of Muhammad Tughluq (1325-51), the advancing of loans to peasants
in order to encourage cultivation does not seem to have formed part of the
agrarian policy of the administration.14But during a famine in the first decade
of his reign, Muhammad Tughluq ordered the digging of wells and gave
money and seeds to peasants around Dehli to help them undertake cultiva-
tion, demanding in return a part of the produce for the State granaries. This was
apparently regarded as an innovation, because a Muslim theologian condemned
it presumably on suspicion of usurious gain accruing to the State from the
transaction.15 However, the Sultan showed his faith in the new practice
not only by executing the hapless scholar, but also by undertaking a far more
ambitious project on the same lines a few years later. His object now was to
extend cultivation and improve cropping in the Dehli-Doab region. For this
purpose he set up a whole body of officials, who were to realise the desired
object mainly through advancing loans (termed sondhar) to the peasants.
According to one contemporary historian nearly 7 million tankas (coins of
practically pure silver, each weighing nearly 173 grains) were disbursed by
the royal treasury to be given out in such loans; but another, slightly later,
historian puts the figure at 20 million tankas.16
What was an innovation in the 14th century became under the Mughals
(16th and 17th centuries) a familiar, almost routine, administrative practice.
It was laid down in practically all regulations and instructions issued to

14 Barani mentions this practice neither in his account of CAlau-dDin Khalji's radical
agrarianmeasures nor in his passage on Ghiyasu-d Din Tughluq's views on land-revenue
administration.The sole means of encouraging cultivation that the latter Sultan is said
to have recommended was moderation in enhancing the land-revenue. (Tafrikh-iFTirz-
shahl, Bib. Ind., pp. 287-91, 429-31).
15 The Rehla of Ibn Battuta, tr. Mahdi Husain (Baroda), pp. 88-9.
16 Barani, Ta'rkh-i Firiz-shahl, pp. 498-9; Shams Siraj 'Afif, TaOrikh-iFiriz-shahL,
Bib. Ind., p. 91. The term sondhdr was indigenous. It has continued in use in the same
region in the sense of money on advance 'given to ploughmen when first engaged"
(H. M. Elliot, Memoirs on History, Folklore & Distribution of the Races of the North-
WesternProvinces of India, ed. Beames, London, 1869, II, p. 345). For the tanka, see
H. N. Wright, The Coinage & Metrology of the Sultans of Delhi (Delhi, 1936), especial-
ly, pp. 391-402.
 USURY IN MEDIEVAL INDIA 397
revenueofficialsthat they oughtto advanceloans, calledtaqdvi(lit. "strength-
giving";"taccavi"of modernAnglo-Indianusage), out of the treasuryto the
peasantsto enable them to buy seeds and cattle. The loans were generally
advancedthroughthe villageheadmenand otherhereditarylocal officialswho
stood surety for repaymentby the individualcultivators.The loans were
generallydue for repaymenteitherat the time of harvestin two instalments,
or at the firsttwo harvests.Thereis no referencein the Mughal-period records
to interestbeingcharged,thoughit is possiblethatthe local officialstook their
own commissionsfrom the peasants,particularlywhen they stood surety.17
It seems that such officials also advancedloans to the peasants out of
their own resources;and these too bore the name of taqav.8l On such loans
the borrowerswere presumablymade to pay interest; and a referenceto
intereston taqdvimade in Yasin's Glossary(latterhalf of the 18th century)
probablyapplies to these loans. Whenever,accordingto the Glossary,the
peasantsobtainedtaqdvi,they paid two annasin the Rupee (or l/sth of the
principal)as "profit"(munafac)(permonth,or for each harvest?);and when-
ever they borrowedfor plantingsugar-cane,they paid Rs 2 per bigha (meas-
ure of area, of varyingsizes) of the field planted.'9
Medievalruralsociety contained,besides the peasants,a superiorclass to
which contemporaryterminologyfrom the 16th centuryonwardsgave the
name zcamndar.The zamnnddrsheld rights of various types over land and
its produce,often compounded(nominallyat least) at a particularshare of
the produce,or of the land-revenue.They were usuallycalled upon to collect
and pay the land-revenuedue on the lands over which they had such rights.
This obligation,apartfrom other factors, also placed them underthe neces-
sity of havingrecourseto the usurer,wheneverthey either could not collect
the land-revenueor had spent what they had collected. Jauhar recordsin
his memoirsthat when in 1554 he was appointedRevenue-collectorof Patti
Haibatpurin the Panjab,he was distressedto find on reachingthe place that
"the Afghanshave borrowedlarge sums from the baqqals(grain-merchants;
also membersof the well-knownIndiancommercialcaste of Banyas)to pay
the land-revenue,pledgingwith them the wives and childrenof their servants

17 The 16th-and 17th-century documents on which the statements in this paragraph

are based, are too numerous to be cited in full; a selection follows. Todar Mal's
Memorandum, Akbar's 27th regnal year, original version in an early draft of
Akbarnama, MS British Mus. Add. 27,247, f. 331b; Abu-l Fazl, Ain-i Akbar?, ed.
Blochmann, Bib. Ind., I, p. 285; Adab-i CAlamgirT, MS British Mus. Or. 173, f. 123b;
Sadiq Khan, History of Shhahiahn'sReign, MS Brit. Mus. Or. 174, f. 185a; Farhang-i
Kardani, MS Aligarh: Abdus Salam F.85/315, f. 35b. For a detailed treatment of the
subject, see my Agrarian System of Mughal India, pp. 253-55.
18 For taqadvadvanced to peasants by chaudhuris (chief local officials of a pargana),
see Public Record Office, Allahabad, Ist Series, Doc. No. 424 (A.D. 1665) and Durru-l
'Ulim (A.D. 1688-9), MS Bodleian, Walker 104, f. 43a; and for the same by muqaddams
(village headmen), see Durru-l cUlfim, f. 55a-b.
19 MS Brit. Mus. Add. 6603, f. 54a.
398 IRFAN HABIB

(zah-o-zad-i mawali), so that [since the Afghans had fled] there is no way
for the latter to obtain their release". Jauhar thereupon seized all the gran-
aries of the Afghans, sold the corn and paid off the baqqals to secure the
pledges' freedom.20 Similarly, in mid-18th century Bengal, there were
mahajans who "offer to pay the land-revenue on behalf of the zam7ndar.
Till their time (of final accounting) comes, they obtain great profit from the
perquisites of revenue-farming, interest, commission, etc." Such mahajans
were in fact often ambitious of becoming zamindars themselves, taking over
the zamindarls of their debtors when the latter failed to repay their debts.21
In normal circumstances, the mahijan's presence, enabling the zamindar
to obtain money whenever the need arose, must have been quite welcome to
the latter. A case on record suggests that considerable intimacy could spring
up between the two. A Muslim trooper or officer from the Panjab, serving
in the Mughal expeditionary army in Rajasthan in 1680, heard that the
mahajans of his village, of which he and his brothers were obviously the
zamindars, had been attacked and plundered by the zamdndars of three
neighbouring villages. He forthwith went to his commander to express his
great anxiety about their protection, declaring that "the mahajans of that
place, except for their faith and religion [the mahajans being presumably
Hindus] are one with us and are like brothers and relatives to us".22Similarly,
we find the holder of a land-revenue grant greatly interested in getting back
to his village certain mahajans whom neighbouring zamdndars had driven
away: On his petition the emperor, Shahjahan, issued a farman (A.D. 1653),
directing his officers to reassure and resettle the mahajans.23

Commercial Usury

It thus seems that usury had deeply penetrated rural life, the penetration
being impelled by the large magnitude of the land-revenue demand and the
growth of the cash nexus. The enormous revenues of the ruling class and the
drainage of a large part of the agricultural produce to the towns through the
channels of commerce also helped to create and maintain a large non-agri-
cultural population consisting of various classes such as artisans and la-
bourers, petty traders and merchants, and the nobility and its hangers-on.
Naturally, they were far more immersed in pure monetary relationships than
the rural population.
20 Mihtar Jauhar, Tazkiratu-l Waqicat,MS British Mus., Add. 16, 711, f. 132a-b.
21 Risala-i Zirdat, MS EdinburghNo. 144, f. lOb.
22
Waqiiic-i Ajmer (official intelligencer's reports to the Court from Ajmer, &c.),
Jumada I, 23rd regnal year of Aurangzeb (Aligarh transcript, p. 555). The village was
called Aurangpir Badal. The name of the trooper's father was Badal, so that it may be
assumed that the father had settled the village in the reign of Aurangzeb.
23 For the text of the farmdnsee Proceedings of the IndianHistoricalRecords Com-
mission(1942),pp. 56-7.
 USURY IN MEDIEVAL INDIA 399

The story is told in a 17th-centurywork of how the famous religious

teacher,Kabir, a weaverof Banaras,findingnothingin his hovel to feed his
guests, sent his wife to the shop of a baqqalto beg for rice and ghi (Indian
butter)on credit,submittingto whatevertermsthe baqqdlimposed.24Of this
directresortto the usurerbecauseof sheerpovertyany furtherexamplesare
not available;but this is, perhaps,only becausewe have so little information
relatingto the social life of the commonartisan.That he dependedvery often
on credit for his subsistenceis shown by his readinessto accept terms un-
favourableto himself from anyone who gave him a part of the price of his
wares in advance.The Englishin the 17th centuryfound, and followed,the
practiceof giving money beforehandto weaversalmosteverywherein India;
at Surat,for example,as well as in Sind, the Dehli region,Bengal and Gol-
kunda.25In Bengal a technicalterm seems to have developedfor such ad-
vances made to artisans,namely, dadani, from the Persianword dadan, to
give.26
From referencesin Englishfactory recordsit is possible to determinethe
customaryterms on which these advanceswere made. When a weaver ac-
cepted money in advance,he committedhimselfto give priorityto the work
orderedby the lender and to deliverhis cloth within the stipulatedperiod.27
No interestappearsto have been charged,providedthe work was completed
by the due date. This did not preventcertainother impositionsbeing levied
on the artisan:The weaversat Suratworkingfor the Englishwere forced to
pay 12% of the advances received by them to the broker who acted as
middle-man.The prices of the finishedproductstoo were fixed beforehand,
so that it may be assumed that the weavers, or artisans,usually received
less than the marketprice.28The advancesmight be made in cash,29or in
24 Dabistan-i Mazahib (Bombay), pp. 159-60.
25 English Factories, 1661-64, pp. 111-2, 208-9 (Surat); ibid., 1637-41, p. 137, &
1646-50, p. 159 (Sind); 1624-29, p. 149 (Samana, Dehli province); 1655-60, p. 296 &
1661-64, p. 62 (Bengal); and 1637-41, pp. 68-9 (Golkunda).
26 Hobson-Jobson, s.v. DADNY (p. 290). All the instances of the use of this word cited
here come from Bengal.
27 English Factories, 1661-64, pp. 112, 208-9. A complaint is recorded from 1647
that the weavers at Nasrpur in Sind were "a company of base rogues, for, notwith-
standing wee give them mony aforehand (?) part of the yeare, and that in the time of
there greatest want, yet if any pedling cloth merchant comes to buy, they leave us and
work for him" (ibid., 1646-50, p. 159). For the period being stipulated, see Totle's report
from Samana in 1626, saying that he "has distributedsome 4,000 rupees to the weavers,
who will bring in their goods within ten days" (ibid., 1624-29, p. 149).
28 The last three sentences are based on a long passage in the English Factories,
1661-64, pp. 111-2, setting out a detailed exposure of the irregularitiescommitted by
the broker Somaji in the management of the loans advanced to the weavers on behalf of
the English. The only reference to interest is to the one charged by the broker from the
English whenever he himself provided the money for disbursement among weavers.
When accepting the advances, the weavers bound themselves to supply the specified
pieces at 5 % mahmudis (local coins of alloyed silver), while the broker took from the
English 6 14 mahmudis per piece.
29 Cf. Hobson-Jobson, p. 290, for quotation from Hedges, Diary, October 2, 1683,
400 IRFAN HABIB

kind. At Suratit was found that the weaverswere paid not "in Money (i.e.
silvermoney),but in leiw thereofin old wormeeaten decayedcome and pice
(whichis a coppercoyne...)"; and these were probablyover-ratedat that.30
The Englishin Bengal experimentedwith anotherstep, more in line with the
classic "putting-out"system,when they suppliedthe weaversnot with money
but with raw material,i.e. wound silk.38
The petty traderappearsto have been no less dependenton the merchant
money-lenderthan the artisan.A numberof verses of the popularreligious
teachersof the 15th and 16th centuries,preservedin the Sikh scripture,the
Gura GranthSahib, shed an interestinglight on the relationshipbetweenthe
lending merchant,the sah or sahu, and the traders, banjdras,bdpdrisor
biiparis. It seems to have been usual for the saihi to make a loan to the
traderto carry stock to other places, the principaland intereston the loan
being repaidout of the goods that the traderbroughtback. Thus Kabir (c.
1520) in one of his verses expresseshis unwillingnessto take up the work
of the grain-carrier(banjara),because in that "the stock (mil) diminishes,
while the interest (biaj) increases, constantly".32Nanak asks the trader
(banjara,i.e., man) to buy such goods only as would be approvedby the
discriminatingsihu (God) beyond.33Arjan speaks of God as the greatsahu,
dwellingin a palace and served by his millions of banjaras,and one whose
confidence it is not easy for new bapar7sto gain.34Elsewhere, the same
teacher comparesthe relationshipof the Guru, or spiritualGuide, and his
sikhs (disciples)to that of the sahu and his banjaras,except that the capital
(punfi) in the former case consists of God's name, not money.35It may be
markedthat the petty trader'ssubjectionto the usurermust have been almost
absolute,if it could thus be comparedto man's subservienceto God or to
the disciples'to the Gura.
Such authorityin the hands of the usurerwould seem to imply that it was
extremely difficult for the petty trader to obtain capital for financing his
trade;and a completesubordinationwas requiredfrom him before he could
have his stock. But at higherlevels in the commercialworld merchantshad

referring to the payment of "dadny" (dadanl) in sikka or newly coined rupees, at

Qasimbazar.
30 English Factories, 1661-64, p. 112.
31 The reason
given for the step was that "being poore men", the weavers purchased
silk of bad quality and thus "those that trusted them (with money) were forc't to receave
any taffetyes never so badd". (English Factories, 1655-60, p. 296).
32 Guri Granth Sahib, Devanagari text, published
by the Gurudwara Prabandhak
Committee (Amritsar, 1951), pp. 1194-5. The term banjara was generally applied,
as in these verses of Kabir, to a wandering community of traders who transportedgrain,
sugar, salt and other goods of bulk. In the verses of Nanak and Arjan, however, the
word is apparentlyused for any trader and thus treated as a synonym of bapiir.
33 Ibid., I, p. 22.
34 Ibid., I, pp. 180-81.
35 Ibid., I, p. 430.
 USURY IN MEDIEVAL INDIA 401
access to the services of a large money market where lending was purely for
the sake of interest and did not involve any control over the operations of
the borrower.
One index of the existence of such a money market is provided by the
wide use of the "indigenous" bills of exchange. The hundi or hundw7 was a
bill promising payment at a particular place after a specified period, usually
of two months or less. It was fully saleable so that a merchant or anyone else
who had cash on hand for a short time, could invest it by discounting hundis.
So brisk had the sales of hundis become that, according to a mid-18th century
historian of Gujarat, commercial payments were generally made in these bills
and only seldom in cash. Professional bankers, known as sarrafs, specialised
in dealing in hundis, by which means they financed commerce to a consider-
able extent. The discount charged on the bills covered not only interest, but
also the cost of insurance and of the transmission of money. It is, therefore,
difficult to work out from the discount, or "exchange", the rates of interest
paid on short-term commercial loans.36
Issuing hundis was, however, only one of the ways by which merchants
borrowed money. Thanks to the published English records we are in posses-
sion of extensive information about how money was raised by merchants and
the rates of interest which prevailed in Indian commercial centres during the
17th century.
When the English first came to India, they were evidently not greatly
trusted in the Indian markets. In 1617 we find the Surat factors rejecting a
suggestion that as much as Rs 40,000 could be raised by them in India or
anything obtained at a rate lower than 3 % per month. For this they gave as
reasons, not their own lack of credit, but the poverty of the people, who
"have not money to lay out", and the fear entertained by the people of
tyrants who might seize their money if they knew they had some to lend.37
But with the passage of time the credit of the English rose, and they were
able to borrow large amounts at rates far below 3%. Their subsequent
records contain a considerable amount of information on their own trans-
actions and on the rates generally prevalent, which completely refutes the
earlier reports of the factors. The following tables set out part of this in-
formation, which is taken entirely from the volumes of the English Factories
in India.38

36 For a detailed treatmentof the subject of this paragraph,see my article on "Banking

in Mughal India", in Contributionsto Indian Economic History, I, ed. Tapan Raychaud-
huri (Calcutta, 1960), pp. 8-14. The reference to the use of huni7lsin commercial pay-
ments is in 'Ali Muhammad Khan, Mir?at-iAhmadi, ed. Nawab Ali (Baroda), I, pp.
410-11.
37 Letters Received, V, pp. 86-7.
38 I should thank my friend and colleague, Mr. A. J. Qaisar, for drawing my attention
to a number of references given in these tables.
402 IRFAN HABIB

SURAT

Amount Rate of interest

Year borrowed per month Remarks and References

1624 - 1% 'Usual "bezar"(market)rate'. F. 1622-23, 178.

1634 - 1/8% Interest added to certain accounts in English
books. F. 1634-36, 35.
1635 Rs 20,000 1% Letter of credit obtained by factors. F. 1634-
36, 114.
1642 1 or 11/4% Rates at which factors believed able to bor-
1% row. F. 1642-45, 33.
1650 L 20,000 Amount the English could raise; lower rate
(nearly not possible. F. 1646-50, 316.
Rs 180,000)39
1651 L 20,000 /2 % Amount the Company authorisedSurat factors
*|,~~~~ ~~to borrow. Rate (quoted as 6% p.a.) believed
"usual between Banians" (belief contested by
factors). F. 1651-54, 86.
1652 - 3/4% Lowest rate prevailing. F. 1651-54, 86.
1652 - /2% Rate (quoted as 6% p.a.) at which factors
hoped to borrow. F. 1651-54, 109-10.
1652 Rs 200,000 %% Loan raised by factors. F. 1651-54, 119.
1654 265,824 1/2 & 5/% Current English debt, part at one rate, rest at
mahmidis the other. F. 1651-54, 222.
(over
Rs 100,000)
1657 - %% Borrowing expected to be possible at this rate,
quoted as 7 /2% p.a. F. 165 5-60, 144-5.
1659 - % & /2 % English able to borrow at these rates (quoted
as 71/2 & 9% p.a.) only. F. 1655-60, 158.
1659 63,000 34 % Private Englishman'sdebt. Rate quoted as 9%
mahmidis p.a. F. 1655-60, 196.
1659 - /8 % Sarrafs said to be willing to pay this rate
(quoted as 7/2% p.a.) on deposits by English.
F. 1655-60, 199.
1665 - 3 % "Common interest" paid by merchants. F.
1665-67, 5.
1665 - /2 % Rate expected on Company's loan to "mer-
chants of a cleare reputation". F. 1665-67,
196.

It will be seen from these tables that, except for certain rates quoted for
the year (apparentlyfor the convenienceof the Englishthemselves),the rates
of interestare usuallyquotedfor the month.There can hardlybe any doubt
that this was the generalpracticethroughoutthe medievalperiod.40Fixation
of interestin monthly rates seems to suggest that loans were generallyad-
39 Here and elsewhere amounts given in Pounds sterling are converted into Rupees at
the rate of 2s. 3d., which seems to have been accepted by the English Company at the
time (e.g., English Factories, 1642-45, p. 209).
40 The 14th-centurypoet Amir Khusrau of Dehli, referring to a usurer, speaks of his
constant impatience to see the month pass to that he might claim his interest (Matla'u-l
Anwar, A.D. 1298-9, Aligarh, 1926, p. 174).
 USURYIN MEDIEVALINDIA 403
AHMADABAD

Amount Rate of interest

Year borrowed per month Remarks and References

1628 Rs 10,000 1% Raised by factors. F. 1624-29, 215.

1628 Rs 8,000 1/2% Loan against gold pledged with lender. F.
1624-29, 270.
1640 - above 1 /4% Rates on English borrowings.F. 1637-41, 225.
1647 - above %% Rates on English borrowings.F. 1646-50, 112.
1647 - /16% Lower rate than this not allowed by lenders
on English borrowings. F. 1646-50, 128.
1658 Rs 24,000 %3/% Debt contracted by local factors. F. 1655-60,
163.
1658 - / % Surat factors arrangefor credit at Ahmadabad
at this rate. Ibid.

AGRA

Amount Rate of interest

Year borrowed per month Remarks and References

1628 - 3 % Loan raised by factors. F. 1624-29, 239.

1645 - %% Rate at which sarrifs accepted deposits. F.
1642-45, 302-3.
1645 - 1 to 21/2% Rates at which sarrafs advanced loans. Ibid.
1645 Rs 57,000 1% Rate on English debt incurredpreviously. Ibid.
1645 Rs 12,000 3/4% Reduced rate on English debt. Ibid.
1645 - %% Rate on fresh English loans. Ibid.
1647 - %% Rate on English borrowings.F. 1646-50, 122.
1654 Rs 21,000 3/4% No outsider willing to borrow at this rate
from Company. F. 1651-54, 301-2.

vanced for short terms only.41Interest,however,was not compounded.No

referenceto compoundingoccurs in the English records;and at one place
wherethe total amountof interestdue on a given sum at a particularmonthly
rate for a period of over one year is calculated,the resulthas been obtained
by simply multiplyingthe monthlyintereston the principalby the number
of monthsin the period.42
In studyingthe rates given in the tables it may be borne in mind that the
rates are mostly those at which the English factors borrowedon behalf of
the Company.These need not have representedthe rates prevalentin the
market.In fact, it appearsthat they were generallya little higher than the
41 Cf. the advice given by the Surat factors to the Company in 1652 that loans raised
in India were "at times only for a month" (English Factories, 1651-54, p. 86).
42
Principal: 10,000 pagodas; rate: 1l/2% per month; period: 9.iii.1646 to 29.vi.1647
(= 153 months). Total amount of interest, as calculated: 2,350 pagodas. (English
Factories, 1646-50, p. 213).
404 IRFAN HABIB

THE DECCAN

Amount Rate of interest

Year Place borrowed per month Remarks and References

1635 Masulipatam 10,000 or 2 & 21/2% English debt. F. 1634-36, 140.

12,000
pagodas *
1636 Masulipatam 16,000 2%/2& 3% English debt. F. 1634-36, 295.
pagodas
1645 Golkunda 20,000 rials 1 /2% English debt. F. 1646-50, 112.
1647 Raybag 10,720 1/s % Rate on English debt quoted as
great pagodas 13 /2% p.a. F. 1646-50, 155.
1647 Golkunda 10,000 1 1/16 % English debt. F. 1646-50, 308.
old pagodas
1648 Madras - 1%/% Lowest rate current.F. 1646-50,
213.
1654 Coromandel - 11 % Rate current. F. 1651-54, 222.
Coast
1665 Madras 1,200 11/ % English factor's loan to broker.
pagodas Rate quoted as 15% p.a. F.
1665-67, 104-5.

* Pagoda = 4 to 5 Rupees.

market rates. Thus the English seldom succeeded in securing the same rates
as lenders as the ones they paid as borrowers.43The Company seems to have
often entertained the suspicion that its factors overstated the rates at which
they could borrow. It is, therefore, quite possible that the progressive decline
in the rates that one sees in the above tables, especially under Surat, was due
to the increasing watchfulness of the Company in this respect.
It appears from the tables that the rate of interest at Surat generally varied
from Y2 to 1 % per month; and this seems to have been broadly true of the
rates at Ahmadabad and Agra as well. But in the Deccan, notably in Gol-
kunda and on the Coromandel Coast, the rates were distinctly higher, fluc-
tuating between 1 and 112% per month. For the moment, this difference
between rates prevailing in two parts of the country cannot be explained.
A matter requiring still greater attention is the difference that existed
between interest rates in Europe and India. We find the English factors in
India repeatedly impressing upon their superiors in London the loss that the
Company incurred by borrowing in India to finance its trade. They here paid
"double the interest which is exacted in England" (1650).44 In England money
could be borrowed at 4% per annum, while at Surat the rate was 7,1 if not
9% (1659).45 It was stressed that owing to this difference, it would have been
profitable for the Company to send money to India, simply to be employed

43 For such cases see, especially, SURAT 1665 and AGRA 1654 in the tables above.
44 English Factories 1646-50, p. 278.
45 Ibid. 1655-60, pp. 158, 199.
 USURY IN MEDIEVAL INDIA 405
in usury:And "You need not feare bad debts",the Companywas told, "for
money at interest never faile of good securitye" (1660).46
Besides ordinarycommercialcredit which we have been discussing,i.e.,
secured loans or loans advanced to merchants commanding confidence, there
were also formsof speculativeinvestmentwherethe lenderbore considerable
risks. Thus we hear of a practice called in the English records "awg"or
"avog", obvious corruptions of an Indian name which it has not been possible
so far to identify. It is parenthetically explained at one place as being the
same as bottomry ("bottomarie"). Another passage shows that in "avog" the
money borrowedwas laid out in cargo to be shippedto a particularplace,
the lendersbearingall risks of the voyage. The rates chargedin "avog"were
naturallyhigh. For the voyage betweenSurat and Gambroonin the Persian
Gulf, they are said to have variedbetween 14 and 18% (1640); and in 1669
certainSuratmerchantswere reportedto have taken up money at "avog"at
"44, 50 and 60 per cent."for a voyage to the Philippines.47
It is impossible,of course,to computethe amountof finance availablefor
commercialtransactionsat any time in medievalIndia. But it was probably
never negligible.For this the ability of the English to finance their entire
trade with India from money raised here, may be offered as a convincing
testimony.In 1645 at Agra alone they had a debt of Rs 80,000.48In 1650
the Suratfactorswere sure they could raiseL 20,000 (= Rs 180,000) at any
time they liked;49and two yearslatera singlecreditorlent themRs 200,000.50
By 1660 the English Company'sdebt at Surat had gone up to L 70,000
(= over Rs 600,000); 51 and in 1669 its factorsagaincontracted"a vast debt
at interestto the amountof 600,000 rupees".52 At the same time the Dutch
Companywas believed in 1639 to have raised as much as Rs 800,000 in
India at the rates of 11 and 1 /2% per month.53
If the Englishrecordsare any guide, merchantsthemselvesby lendingto
each other provideda large part of commercialcredit.54The biggestcreditor
of the Englishat Suratwas Virji Vora, who for nearlyforty years lent them
46 Ibid. 1655-60, p. 215.
47 The two basic passages, from which our information on "avog" as given here is
derived, are in English Factories, 1637-41, p. 272, and 1668-69, p. 195. See also ibid.
1634-36, p. 232 & n., 1655-60, p. 235 n. and 1665-67, p. 202.
48
English Factories, 1642-45, pp. 302-3.
49 Ibid. 1646-50, p. 316.
50 Ibid. 1651-54, p. 119.
51 Ibid. 1655-60, p. 214 n.
52 Ibid. i668-69,
p. 193.
53 Ibid. 1637-41, pp. 116-17.
54 That merchants supported the money market to a very large extent is suggested by
statements such as the following (Surat, 1665): "Money is not now procurable at interest
here, as in former times, for since Sevages [Sivaji's] robery of this towne [1664] those
eminent merchants who were wont to furnish the Companyes occations are disabled,
and would rather take up moneys to supply their owne; they are generally so disjointed
in their credits and estates that they will not trust one the other". (English Factories,
1665-67, pp. 19-20).
406 IRFAN HABIB

very large sums of money, often runninginto lacs of rupees.55Despite his

being occasionallydescribedas "money-lender"or "sheroff",56 he was pre-
eminently a merchant. Indeed, the Englishcomplained that he lent them only
to secureadvantagefor himselfwhenbuyingtheirgoods.57He did not usually
employ his capital in usury, it being said of him and anotherleading Surat
merchantthat both of them were "prodigiousmoneyed men, who having
alwaysvast treasureready in house, doe esteeme it safer investedin (such)
sollid unperishablecomoditysthoughthey get but 4 and 6 per cent. by them,
then eitherin cash or at interestor avog".58As a rule, while merchantsmight
invest the idle cash on theirhandsby lendingto othermerchantsor discount-
ing their hun.dis,there was a separateclass of persons, known as sarrafs
("shroffs"),who really specialisedin the provisionof commercialfinance.
The sarrafstoo sometimesengagedin trading,but for them commercetook
a second place to usury and banking.The separationbetweenthe merchants
and commercialusurersis strikinglybroughtout in the accountof an incident
that took place at Ahmadabadin 1715. The sarrafsof that city had a leader
of their own, at whose behest they raised the rate of anth or discount on
cash-paymentsmade against hun.ds. Thereuponthe merchants,headed in
theirturnby the nagar-seth(chief merchantof the city), suspendedbusiness;
and there was a threatof even armedclashes between the two sides.59It is
possible that the sarrafs,who, as we shall see, accepted deposits,provided
commercewith capital that was in part at least purely non-mercantilein
origin.
The State occasionallyservedas yet anothersourceof commercialfinance.
Sultan'Ala'u-d Din Khalji(1296-1316) is said to have encouragedthe flow of
tradeby givingloans to merchants.He advancedsums amountingto 2 million
tankas to"wealthyMultanis",requiringthem "to bring commoditiesfrom
various parts of the country and sell them at rates fixed by the Sultan"at
Dehli.6?0Whetherhe demandedinterestis not recorded.In the 17th century
55 A few examples of Virji Vora's money-dealings with the English may be provided.
In 1635 he gave a letter of credit for Rs 20,000 (English Factories, 1634-36, p. 114)
and a little later offered them Rs 200,000 even at a time of commotion (ibid., p. 216);
in 1645 he lent an amount equal to 20,000 rials at Golkunda (English Factories, 1646-50,
p. 18) and in 1647, 10,000 old pagodas (= Rs 50,000), again at Golkunda (ibid., p. 308);
in 1669, he and his family together with other "sheroffs" lent to the English at Surat
Rs 400,000 (English Factories, 1668-69, p. 193).
56 English Factories, 1655-60, p. 159; ibid. 1668-69, p. 193.
57 Ibid. 1642-45, p. 108. Cf. also ibid. 1655-60, pp. 158-9.
58 Ibid. 1668-69, p. 184. Cf. ibid. 1655-60, p. 215, where it is said that "Virgee Vorah
is the only master of it (money, at Surat), and he is so close fisted that for the con-
sideration of no interest cannot yet be procured of him".
59 Miryat-iAhmadi, I, pp. 410-11; see also pp. 405-07.
60 Barani, T?rrikh-iFiruz-shahl, Bib. Ind., p. 311. See also The Rehla of Ibn Battuta,
tr. Mahdi Husain, p. 41, and CAfif, Ta4rikh-iFiruz-shahl, Bib. Ind., pp. 293-4. Where
Barani speaks of "Multanis",Ibn Battuta and 'Afif speak of merchants in general. The
authoritative 18th-century dictionary, Bahdr-i 'Ajam (s.v.), defines "Multani" as the
general name for a Hindu in Central Asia and Persia, and explains that this was so
 USURY IN MEDIEVAL INDIA 407
we read of a large loan of half a million Rupees advanced at Shahjahan's
orders from the imperial treasury to one "Munnodas Dunda" to enable him
to purchase the entire supply of indigo in the Empire, of which he had been
given the monopoly. No interest as such seems to have been charged; but the
monopolist was required to repay the loan within three years, together with
Rs 600,000, in three equal instalments out of his profits.6t From the reign
of the same Emperor comes other evidence of loans made from treasuries
and mints to merchants. In one case, the Governor of Surat extended a large
loan, interest-free, to the English against bullion deposited in the mint.62At
another time, the Surat factors expected to borrow Rs 20,000 or 30,000
from the Surat mint and the Governor's treasury.63The English factor at
Thatta (Sind) once complained that money was scarce there, and as soon as
the mint turned out any money, "the merchants here pay it to the King's
diwan [revenue and financial officer] in satisfaction of advances made by
him".64No reference to interest is made, but it would be surprising if it was
not charged.

Indebtedness among the Ruling Class

The medieval ruling classes consisted largely of men who were the King's
servants. These persons derived their income from salaries sanctioned by the
King, in lieu of which they were assigned territories, known in the earlier
centuries as iqtd's and under the Mughals as jigirs. Within the territorial
assignment the King's taxes, in particular the land-revenue, were alienated,
for the period of assignment, to the assignees. Since the land-revenue itself
accounted for the bulk of the surplus produce from the land, the resources
at the command of the nobles must have been enormous. However, the
expenses of the nobles kept pace with their income; and it seems to have
been common for them to anticipate in their spending the actual collection of
revenue, which could be made only at the time of the two harvests, in autumn
and spring. With all their wealth, therefore, they were compelled to have
recourse to the usurers, who were in return granted a claim on the collections
in the assignments.
Thus on the very morrow of the Turkish conquests, the conquerors appear
in the position of debtors to a class of their subjects. In an account relating
to the period of Sultan Ghiyasu-d Din Balban (1266-87), we are told that

because the Hindus settled there originally came from Multan. "Multani",when used by
Barani, would therefore seem to mean a Hindu merchant.
61
English Factories, 1630-33, pp. 324-25.
62 Ibid. 1634-36, p. 68.
63 Ibid. 1637-41, p. 193.
64 Ibid. 1646-50, p. 72; also p. 101.
408 IRFAN HABIB

"the Multanisand Sahs of Dehli, who becamepossessedof great riches,got

them from out of the wealthof the old nobles and commandersof Dehli, for
the latter borrowedbeyond limit from the Multanisand Sahs, and gave the
creditorstheir due, together with largesses, from (the revenues of) their
iqtfas." 65 In Mughaltimes too the nobles seem to have generallyborrowed
againstthe revenuesexpected from their jagirs, or assignments.An officer
deprivedof his jagirexplainedthat "hadhe a jagir,the mahajanswouldhave
given him somethingby way of a loan" and so alleviatedhis distress.66 Simi-
larly, when the the
Englishattempted recovery of a debt from a Rajput noble
of Shahjahan,they obtained "writeings"for the repaymentof the debt in
annualinstalmentsto be realised "in two equall portions and at the tymes
when his yearely rents comes in, proceedingfrom come, etc.", necessitating
personalattendanceof the creditors'agent in the noble'sterritory.67
The Mughalnobles also appearto have inheritedthe habitof theirTurkish
predecessorsof borrowing"beyondlimit"and payingthe lendershandsomely
for their service. The English factors noted in 1645 that the "sheroffs"at
Agra were tempted "for lucre" to dispose of "greatsummes to persons of
qualletieatt greaterates".68 On the eve of the Warof Successionof 1658-59,
Prince Muradraised as much as 1.1 million Rupees at Ahmadabad,half of
it from the sons and brothers of Santidas Sahi and the rest from other
"merchants",for the repaymentof which he issued drafts on the revenues
of certainports and parganas(sub-districts)of Gujarat.69 His elder brother,
Shuja', seems to have borrowed money by issuing "bills of debt";70 but the
total debt he contractedis not known. Nobles were perhapsnot averse to
lendingto each other. We are told incidentallyof a loan of Rs 300,000 ex-
tendedby Sha'istaKhan, Governorof Bengal, to his subordinate,the gover-
nor of Hugli, at 25% per annum.71
This last transactionconfirms the general statementmade by the Agra
factorsthat the rates on loans advancedto nobles were quite high. It is not
surprisingthat the professionalusurerswere very jealous of their right to
interestin their dealingswith membersof the rulingclass. It is recordedin
a despatchfrom Aurangzeb'scourtthat when (in 1702) that Emperorsought
65 Barani, T&cr1kh-i
Firuz-shahl, p. 120. Barani adds that "whenevera grandee or noble
held a majlis (convivial gathering) and invited great men as guests, his stewards rushed
to the houses of the Multanis and Sahs, gave them notes of hand in their own names,
and took loans on interest, (and) brought (the requisite things) to the majlis of that
munificent noble".
66 Waqaic-i Ajmer, ZiqaCd,23 rd regnal year (Aligarh transcript,p. 413).
67 English Factories, 1651-54, p. 84.
68 Ibid. 1642-45, p. 302.
69 MiPadt-iAhmadl, I, pp. 238-41. "Satidas" in the Persian text is a misreading for
"Santidas".Santidas Sahufwas a big banker and jewel merchant, enjoying considerable
influence at Shahjahan'scourt. He is also referred to many times in the English Fac-
tories.
70 English Factories, 1668-69,
p. 177.
71 Ibid., p. 299.
 USURY IN MEDIEVAL INDIA 409
an interest-free loan (quarg-i hasana) of half a million Rupees from the
"sahiikars of the Imperial Camp", to enable him to pay the arrears of salary
of his troops accompanying him in the Deccan, the usurers politely refused.
They represented that "if the Imperial Court takes (such) a loan, the news
will reach the provinces; and (then) the Governors too will extort (such)
loans, which will mean the banishment of all sahas".72
The high rates of interest which the nobles had to pay to their private
creditors seem to have suggested to Emperor Akbar (1556-1605) the desir-
ability of advancing loans to his officials out of the imperial treasury. Ac-
cording to Abui-l Fazl's official account, "any iqtacdar (= jagirdar, holder
of a territorial revenue-assignment) or a recipient of monthly (cash) salary"
could apply for such a loan, which bore the technical name of musi'adat (lit.
favour, assistance). The loans were not interest-free, but the interest was
supposed to be on such a scale as to offer an example to "the unjust interest-
augmenting ones". It was not taken periodically but realised along with the
principal at the time of repayment. Since Abu-l Fazl has given us the total
amounts repayable in terms of the principal after the passage of different
numbers of years, it is possible to work out the annual rates of interest for
each period of years (remembering, however, that we are calculating on the
basis of compound, not simple, interest). These rates are set out in the table
below.

Ratio of Amount due Annual Rate of

Years completed
to Principal Interest

1 17: 16 6.25 %
2 9: 8 6.10%
3 5: 4 7.70%
4 15: 10 10.70%
5 15: 10 8.40 %
6 15: 10 7.00%
7 171/2: 10 8.30 %
8 171/2: 10 7.20%
9 171/2: 10 6.40%
10 20: 10 7.40 %

It was prescribed that no further enhancement be made in the amount

demanded after it had become exactly double the principal at the end of the
tenth year.73
72 Akhbarat-i Darbar-i MuCalla, Shawwal 16, 46th regnal year (Royal Asiatic Society
Library, London, Case 47, 46/25).
73 Abu-1 Fazl, Alin-i Akbari, ed. Blochmann, Bib. Ind., I, pp. 196-7.
410 IRFAN HABIB

Musa'adat thus seems to have cost the borrower between % and 34% per
monthin interest.Comparingthese rateswith those prevailingin commercial
usury,we can see some justice in the claim put forwardby Abi-l Fazl that
his mastercould serve as a model for other usurers.
We may, therefore, expect that Mughal officers would generally have
preferred to obtain musa'adatrather than borrow from private money-
lenders.However,althoughAbu-l Fazl is silent on this point, there is reason
to believe that musa'adatwas not normally grantedunless certain special
circumstancescould be urged. An official, deprivedof his jagir and not
assignedanother,appealedfor musacadaton the groundthat it was not pos-
sible for him to borrowfrom mahajansin the absenceof a jagir.74 Most often
it was duringmilitaryexpeditionsand campaigns,when the nobles had to
incur exceptionally large expenditureand naturally found it difficult to
borrow from private sources, that large amountswere sanctionedfor dis-
bursementas musaaadat.For two successiveyears, duringthe War in Balkh
and Badakhshan(1646-47), Shahjahanorderedmusa'adatto be grantedto
each individualofficer participatingin the campaigns,equal in amount to
one-fourth of the annual revenues of the borrower's jagr.75 Similarly, during
the RajputWar of 1680, the official intelligencerreportedthat "mostof the
jagirdars(posted with the army),makingan excuse of the distanceand low
revenuesof their jagirs, keep arguingwith Padshah Quli Khan (the Com-
mander), demanding musa'adat."76
The amountof mustaadat,once advanced,became part of the mutdlaba,
or the State's total claim against the officer concerned.77Just as private
creditorsobtained repaymentof their loans throughthe debtor'sdrafts on
their jagirs, so also the mutalabawas "repaidout of theire (the officials')
jaggeers".78From one specific instance, it appears that the Government
affectedthe recoveryof its advancesby despatchingagents to the debtors'
jagirsto seize the amountsdue to it from the revenuesbeing collectedthere.79
The servantsand hangers-onof the nobility,and otheridlers,also provided
a profitableclienteleto the usurers.Soldiersgenerallyfell into debt because
they were not paid their salariesregularlyby their commanders,who were
also generallytheir employers.They were thus "obligedto borrow money
from the sarrafs, or money-changers",who were said to have usually an
understandingwith the officers about "the profit from interest which they

74 Waqfi-i Ajmer, Zi-qad, 23rd regnal year (Aligarh transcript,p. 413).

75 cAbdu-lHamid Lahori, Padshahnama, Bib. Ind., II, pp. 507, 670-71.
76 Waqrt1-iAjmer, Shacban,23rd regnal year (Aligarh transcript,p. 622).
77 "The Kings mutalba which are moneyes lent out of the Kings cussana (khazana,

treasury) to umbrawes (umara', nobles) when they are imployed in any warr" (English
Factories, 1655-60, p. 67).
78 English Factories, 1655-60, p. 67.
79 Waqd?ic-iAjmer, Rajab, 21st regnal year (Aligarh transcript, p. 22), concerning
recovery of musaiadat from the jagirs of some Rajput officers serving in Kabul.
 USURY IN MEDIEVAL INDIA 411
share between them".80In an earliercenturySultan Firiz Tughluq(1351-
87) advancedmoney to his own troops duringa campaign,but we are not
told whetherhe took interest.81
It appears that there were certain persons who financed gamblers.An
Indian dictionary,compiled in 1739-40, defines jahezgzras a person who
advanced"loansto gamblersin need of money, at the rates of 50 per cent
and 100 per cent. (per transactionor per month?)".82

Usurers' Capital

Capitalemployedin usurycould conceivablyoriginatein eitherof two ways:

from gains made by the previousemploymentin usuryof the nucleusof the
presentcapital;or from wealth acquiredin other departmentsof economic
life now channelledinto usury.In a primitiveagrariansocietythe two sources
may be completelyintermixed,since usuriouscapital itself may not exist as
a separateentity. A ruralexploitermay claim a direct share in the produce
of the land on the basis of a socially recognisedright and then extort from
the cultivatoran additionalamounton accountof havinglent him seed and
cattle. The formationof a separate class of professionalusurers,making
theirgain exclusivelyfrom usuryand enlargingtheirstock solely frominterest
so gained, may be the mark of a certaineconomic developmentof society.
This separationof usury from other forms of exploitationoccurredearly in
the historyof civilizedcountries;and India is no exception.The separation
finds its legal expressionin the ban on usuryimposedfor the highesttwo of
the four Indian classical castes (varnas), namely, the Brahmanas and
Kshatriyas,and its assignment,as a legitimateoccupation,to the third,or the
Vaisya, caste.83
In medieval India this caste-specialisationin usury, inheritedfrom the
ancient times, seems to have continuedin full strength. True, as we have
seen, the State and membersof the nobility were not averse to lending at
interest;and there must have been many Muslims,like the usuriouskhwaja
of Amir Khusrau,84 who lived on usury.But by and large,throughoutmedie-
val times,professionalusuryremainedthe occupationof personswho claimed
to be the descendantsof the ancientusurers.A well organisedHindu caste
80 Manucci (c. 1700), Storia do Mogor, tr. W. Irvine, II, p. 379; in another passage
(ibid., IV, p. 409) of similar substance the lenders are said to be "traders",not sarrafs.
See also Fryer, A New Account of East India and Persia being Nine Years' Travels,
1672-81, I, p. 341.
81 Shams
Siraj CAfif, T`rikh-i Firuz-shahl pp. 220-21.
82 Tek Chand
'Bahar', Bahir-i CAjam,s.v. jahez-glr.
83
Manusmriti, 1.90; X.117 (tr. Buhler, Laws of Manu, Oxford, 1886, pp. 24, 426).
Brahmanas and Kshatriyas could resort to money-lending when in distress, but even
then they were to lend to "sinful"persons only and charge low rates of interest.
84 MatlaCu-lAnwar
(Aligarh, 1926), p. 174.
412 IRFAN HABIB

was in existence, that was thought to be the same as the ancient Indian
Vaisyas ("Bais"). It bore a different name, however, viz., "Banya" or "Banya"
(from Sanskrit, "Banik"), and was given in Indo-Persian the slightly confusing
name of "Baqqal".85Members of this caste who engaged in usury were known
as saihs, sahukars and mahijans, the names persisting till today. Another
group within the "Banya" caste was formed by sarrafs (or "shroffs" of Anglo-
Indian usage), who were in the strict meaning of the word money-changers,
but also acted as money-lenders, especially in the commercial world.86
It may be expected that with particular castes specialising in usury, usurious
capital should largely have been the result of self-generation, and so limited
in size. But it seems that in medieval times forms had already developed of
the usurers' raising money from other strata of the population and so ex-
panding their capital. Thus we have evidence of deposit-banking in a rudi-
mentary form, with the sarrafs in particular setting up as bankers.
The historian, Sujan Rai, writing in the later years of the 17th century, con-
sidered the institution of deposit-banking to be one of the achievements of
his country. He tells us that the sarrafs accepted deposits (amanat) from all,
and scrupulously paid them back on demand ('inda-t talab).87A passage in
a letter from the English factors at Agra, written in 1645, gives us an inter-
esting glimpse of the system of "banking" of the period.
Those that are great monied men in the towne, and live onely uppon interest re-
ceive from the sheroffs [sarrafs] noe more than % per cent. per month. The
sheroffs they dispose of itt to others [at] from 1 to 2%/2per cent., running some
hazzard for the same, and that is their gaines. Now when a sheroff (for lucre)
hath disposedof great summesto personsof qualletieatt greate rates, not suddenly
to be call'd in to serve his occasions, then beginn his creditours(as in other partes
of the world) like sheepe one to runn over the neck of another, and quite stifle
his reputacion.Thus... hath two famous sheroffs bynn served within a moneth,
one of which faileing for above three lack [300,000] of rupees, diverse men have
lost great somes and others totally undone therby;which hath caused men of late
to be verie timerous of putting their monies into sherroffs hands.88
These general statements are substantiated by specific instances. We read of
a baqqdl (grain-merchant, or banya) claiming to have deposited a sum in cash
85 The statements
in the precedingtwo sentencesare basedon Abiu-Fazl,A'In-iAkbarl,
ed. Blochmann, Bib. Ind., II, p. 57; and Dabistdn-i Mazdhib (Bombay, n.d.), pp. 121,
123, 125 & 160. Baqqdl had also the more limited meaning, in Indo-Persian, of grain-
merchant, although in Persia it meant a grocer or fruit-seller (Bahiir-i cAjam, s.v.). Cf.
Hodivala, Studies in Indo-Muslim History (Bombay, 1939), p. 672. In the English and
other European records, the corrupt form "Banian"is used for the name of this caste.
86 Van Twist, c. 1630, tr. Moreland, Journal of Indian History, XVI, p. 73, speaks of
"banyan money-changers, called here Paraffes", an obvious misspelling of "Saraffes".
Tavernier says that members of the caste of "the Banians" were either "shroffs, i.e.
money-changersor bankers",or brokers (Travels in India, 1640-67, tr. V. Ball, 2nd ed.,
ed. Crooke, London, 1925, II, pp. 143-144). ?arrdf is a purely Arabic word; but in
India, whether in Persian records or in English, it is never applied to a Muslim.
87 Khuldsatu-t Tawdr?kh,ed. Zafar Hasan (Delhi,
1918), p. 25.
88 EnglishFactories,1642-45,p. 303.
 USURY IN MEDIEVAL INDIA 413
and kind with two mahajansin a locality of Rajasthan.89 The Englishin the
beginningseem to have kept all their cash with sarrafs.90Subsequently,the
factors at Suratreportedto the Companythat the sarrafswould allow them
interest at 71/?%per annum on cash deposited with them.91The interest
which the usurersallowedon these depositseven temptedofficials to invest
funds of the Governmenttreasurywith them. An intelligencer'sreport of
Aurangzeb'sreign accuses a revenue-assessor(amin) and collector (karor)
in the Ajmer province"of conspiringwith the treasurer(fotadar)to deposit
the cash collected(by them) with the mahajansfor (long) periodsat interest
and profit for themselves",and of ignoringthe treasuryaltogether.92
It is unfortunatelyimpossibleto estimate either the amount of deposits
placed with the usurersor the proportionwhich these depositsbore to their
total capital.That deposit-bankingexisted in some form or anotheris, how-
ever, in itself a very significantfact. It implies that commodityproduction
had become so extensivethat the usurers'own resourcesno longer sufficed
to meet the demandfor creditit created;and they had to establish,through
deposit-banking,a channel for the diversionof part of the non-mercantile
wealth of society to commerce.

The State and Usury

Usury flourishedin medievalIndia with the full sanctionof the State. This
may appearsurprisingat first because the medievalkings of India were all
Muslims,and Islam forbidsusury in absoluteterms.Yet the most orthodox
of medievalrulers,Aurangzeb,hastenedon his accessionto assure"all the
merchantsand mahajans(professionalmoney-lenders)and the residentsand
inhabitants(of Ahmadabad)of our justice and good treatmentof (our) sub-
jects".93And, even in his last years, when his orthodoxyhad become almost
fanatical,he acceptedwith equanimitythe refusal of the money-lendersat
his court to lend to him withoutintereston the explicit groundthat, in that
case, his governorstoo might refuse to pay them interest.94
In fact, the medieval State extended its full protection to the creditor.
Here unwrittencustoms,ratherthanthe jurists'codes of Muslimlaw, seem to
have been followed. When the English factors suggestedto the Company
that a debt be recoveredby applying"to the justice of the country",they
went on to explainthat "mostof our dealingsin these partsare done by word
89 Waq&ic-iAjmer, Rajab, 21st regnal year (Aligarh transcript, pp. 29-30).
90 This appearsfrom English Factories, 1634-36, p. 169, which refers to the Company's
order forbidding the factors from keeping their cash outside their factories.
91 Ibid. 1655-60, p. 199.
92
Waq&aic-i Ajmer, Rajab, 21st regnal year (Aligarh transcript,p. 27).
93 Mir'at-i Ahmadl, I,
p. 240.
94 Akhbarat-i Darbar-i MuCalla,op. cit.
414 IRFAN HABIB

of mouth, without any writings, and is good amongst the people; whereas in
England our law is intricate".95The claims for recovery of debts were usually
preferred before the secular officials of the administration, and not before
qazis, the Muslim judges. References to such suits are too numerous to be
cited, but two examples may suffice. We find two successive faujdars (Gov-
ernors) of Ajmer trying a suit for the return of deposits kept with some
mahajans: they both gave judgments partly in favour of the suitor and took
steps to enforce recovery.96Similarly, certain local merchants who had pur-
chased bad "bills of debt" from an Englishman, "cited" the English factor at
Patna, "before the Nabob (Nawwab, Governor) of Pattana, by whose sen-
tence he was forced to pay the money".97Such disputes could actually go up
to the Imperial Court. Emperor Jahangir (1605-27) records in his Memoirs
his trial of a suit for Rs 80,000 claimed from certain Saiyids of Lahor.98
The texts of several imperial orders issued on petitions for recovery of debts
submitted to the imperial Court have been preserved. These are usually
addressed to the local officials, directing them to investigate the complaints
of the petitioners and, if they found them to be true, to force the debtors
to pay.99
There is no reference anywhere either to the inclusion or exclusion of
interest in or from what the State regarded as rightfully due to the creditor.
In practice, in any case, the exclusion would not have had much significance,
since the careful lender could always compel the debtor to attest in writing
to a larger amount than had actually been lent.100
The creditor did not, however, always come away unscathed once he was
obliged to appeal to the administration. As a rule the wheels of government
did not move until well oiled by bribery. In the reign of Shahjahan, at any
rate, it seems to have been a commonpracticewith Mughalofficialsto claim
a fourth part of the debt which they recovered on behalf of any suitor.101
Aurangzeb, immediately after his accession, is said to have forbidden this
95 English Factories, 1665-67, p. 265.
96 Waqiic-i Ajmer, Rajab, 21st regnal year (Aligarh transcript,pp. 29-30).
97 English Factories, 1668-69, p. 177.
98 The suit was
preferred before the Emperor through the Qazi and Mir 'Adl (minister
concerned with justice) at the Court. At first Jhahangir ordered that they should follow
the Sharicat (Muslim Law) in deciding the case. But on being told by his intimate
secretary, MuctamadKhan, that the Saiyids were very emphatic in denying the claims
against them, the matter was referred by the Emperor to Asaf Khan, a leading noble at
the Court, who was to enquire into the truth of the claims. Ultimately the suitor con-
fessed to forgery and was punished for it (Jahangirnama, ed. Syud Ahmud, Ally
Gurh, 1864, p. 306). Thus in the actual process of deciding the case the Sharicatwas
disregarded.
99 See, for example, Durru-l cUlum, MS Bodleian, Walker 104, ff. 43a, 47a, & 54b.
Shahjahangranted the English a farman directing his noble, Rao Satrsal Hada, to repay
the debt his father owed them (English Factories, 1651-54, p. 84).
100 This is a common practice with the Indian professional money-lenders today, who
thus circumvent the various provisions of the law designed to protect the debtor.
101 English Factories, 1634-36, p. 270; 1655-60, p. 75.
 USURY IN MEDIEVAL INDIA 415

practice in express terms.102The actual text of his order prohibits officials

from making any gain whatsoever out of recovering debts.103 That the
Emperor's bans and prohibitions were far from effective is shown by the need
he felt to forbid afresh the officials' custom of taking a fourth of the recovered
debts, nearly fifteen years later.104In 1668 we find a reference to an English
factor promising to the Governor of a town a third of the debt he was seeking
to recover, as if the imperial orders had not been heard of.105The same tacit
defiance appears to have prevailed at the imperial Court itself. When the
creditors of an English factor, who died in 1665, petitioned the Court for
the recovery of their debt from the English Company, it was expected by
the latter's servants that "what verdict they shall get upon us by the Kings
order must be by bribes, or a promise to the partie that procures it, the halfe
or a quarter of the award (a usuall practice for the getting in of desperate
debts)".106
In this atmosphere of corruption, the hands of the officials could, con-
versely, be stayed by rich and powerful debtors. When the above-mentioned
petitions were submitted to the imperial Court, what actually happened was
that Aurangzeb's finance minister, Jafar Khan, unceremoniously tore them
up and turned the petitioners out of court, because the English had kept
"good correspondence" (which implied gifts and presents) with him.l07 A
clause in Aurangzeb's regulations had to warn officials against taking the side
of "merchants and others who show negligence in repaying their debts".108
At the same time, the debtor, if he was poor, enjoyed hardly any protec-
tion. We may recall from Jauhar's reference to loans contracted by Afghans
in the Panjab, that human pledges were not regarded as illegal, although
their fate might arouse the compassion of even a revenue-collector.109A clause
in Aurangzeb's regulations describes it as a practice then current, that "Hindus
and Muslims, who advance loans to some persons, and take and keep their
(the debtors') children as security for the loans, fix the prices of the children
and seize them, if the debts are not paid".110Aurangzeb did in fact declare
this practice to be illegal, but how far his prohibition was effective is difficult
to judge. Officials themselves, when enforcing the recovery of a debt from
which they stood to gain, did not spare the person of members of the debtor's
family. An English factor at Ahmadabad reported that it was not possible
to recover debts from certain persons who were "exceeding poore", and,

102 Khafi Khan, Muntakhabu-l Lulab, Bib. Ind., p. 88.

103 Mi?at-i Ahmadi, I, p. 251.
104
Ibid., I, p. 287.
105 English Factories, 1668-69, p. 165.
106 Ibid., 166567, p. 160.
107
Ibid., pp. 265-6.
108 MS Bodl. Fraser 86, f. 94b.
109 Mihtar Jauhar, Tazkiratu-l WaqiCat,MS Brit. Mus. Add. 16, 711, f. 132a-b.
10 MS Bodl. Fraser 86, f. 94a.
416 IRFAN HABIB

therefore,recommendedthat a fourth part of the debt be offered to the

Governor;for "thenthe Catwall(kotwal,head of the city police) will tare it
out of the sides of them or sell their howse, wife and children to pay it".11

Religion and Usury

MedievalIndian society containedwithin its fold two independentreligious

systems, Hinduism and Islam, between which there was hardly any direct
intercommunication of ideas. This separationwas particularlymarkedin the
field of law, since the jurists of both Hinduism and Islam had separately
developed,and then closed, their codes of law long before the beginningof
the Indianmedievalperiod.On the questionof usurythe two religionsadopt
positionswhich are impossibleto reconcile.
The ancient Indian (or "Hindu")law permittedusury, but restrictedits
professionto the Vaisya caste. Certainlimits were imposed on the rates of
interest.On loans securedagainstpledges, the rate of 114% per monthwas
sanctioned;but in other cases, progressivelyhigher rates were authorised,
with a maximumof 5% per month, according,inversely,to the caste of the
borrower.Compoundinterest was forbidden, and the creditor could not
claim in repaymentan amountmore than double the principal.112
Certainelementsin these rules appearto agreewith the actualcustomand
practicein medievaltimes. Paymentof interestby the monthis one example.
Similarly,the rates of interestcurrentin medievaltimes fall generallywithin
the limits prescribedby Hindu law, althoughno one in those times would
have thought of varying his rate of interest accordingto the caste of the
borrower.In commercialusury,at least, compoundinterestwas not charged.
The prohibitionagainstthe repayableamountexceedingthe principaltwice
over seems to have been paid heed to by Akbar,when laying down the scale
of repayment of musd'adat.l13His Court indeed seems to have been well
familiarwith the relevantprovisionsof the Hindu law on usury.14It could
be arguedthat the very fact of the banya caste's specialisationin usury is a
tribute to the persistentinfluence of the Hindu legal system. But here we
should better speak of the persistenceof a whole body of custom that was
itself one of the sourcesof Hindu law ratherthan its product.
In contrast,the Islamiclaw on usuryhad in its originno connexionwhat-
soever with Indiancustom and practice,with which it provedto be at com-
plete variance.Whateverthe originalpracticein the Arabianpeninsulathat
provokedit, the Quranicprohibitionof riba (usury)is so firm and explicit
111 English Factories, 1655-60, p. 75.
112 Manusmriti, tr. Buhler as Laws of Manu (Oxford, 1886), pp. 278 & n., 280 & n.
113 Abu-1 Fazl, A'in-i Akbari, ed. Blochmann, I, pp. 196-7.
114 These are very accurately summarised in ibid., II, pp. 148-9.
 USURY IN MEDIEVAL INDIA 417
that it logically covers all gain, and not merely excessive gain, obtainedby
the creditor.Islamicjuristsare unanimousin condemningusury in all shape
and form, and have shown no little ingenuityand earnestnessin discovering
and forbiddingusuriousgain lying behind what apparentlyare simple acts
of exchange.115
It was obviouslyimpossiblefor such an absoluteprohibitionof usury to
be enforcedin societieswith more or less developedmercantileeconomies.116
Thereforein the Islamic ethical tradition,in India at any rate, two distinct
strandsare found in the attitudetowardsusury.On the one hand, there is a
generalhostilitytowardsit, based on the law of the faith; and, on the other,
there is a reluctantrecognitionof its unavoidability.Thus the famous Indo-
Persianpoet, Amir Khusrau,writingin 1298-99, declaresthat "in no reli-
gion, underany circumstances,is the gain of the usurerand gamblerregarded
as legitimate",and prefacesthe statementby referencesto a Muslimfinancier
(khwaija),living from month to month, without shame, on interest.117A
contemporaryof the poet, the historian, Zia'u-d Din Barani, deprecates
wealth in that it provides "to the greedy and unmanlyones the means of
engagingin usuryand engrossing".'18 Yet in his counselsfor good administra-
tion, while recommending prohibitionof engrossing,he ignores usury
the
altogether.119
This duality in attitudeis found even in the treatmentof usury by an
orthodox theologian like Shah Waliullah of Dehli (1703-62). He repeats
first the legal view that riba means the takingof any gain from any kind of
loan, and pronouncesit completely "unlawfuland sinful". He then seeks
to justifythe prohibitionon severalgrounds.A poor debtoris forcedto accept
harshterms,and so the contractbetweenhim and the lenderis not voluntary.
Since, moreover,the poor cannot pay in time, they become subject to an
increasingburden. Usury also leads to disputes and conflicts among the
people. Finally, since it is an unproductiveway of increasingone's wealth,
then, says Waliullah a little naively, if it became more widely prevalent,
peoplewouldtend to abandonagricultureand craftsaltogether.But Waliullah
cannotbring himself to prescribethe complete,unconditionaleradicationof
the evil. In what is surely a very tame end to his argument,he decides to
leave to the shari', or the law-enforcingauthority,the freedom to choose
whetherusuryand gamblingshouldbe forbiddenaltogether,or "limitsshould
be set within which they may be permitted".'20
115 Cf. J. Schacht in Encyclopaedia of Islam, first ed., s.v. ribd; also his Origins of
MuhammadanJurisprudence(Oxford, 1950), p. 251.
116 Cf. R. Levy, Social Structure of Islam (Cambridge, 1957), p. 256.
117 Matlacu-lAnwar (Aligarh), p. 174.
118 Tiarlkh-i Firuz-shahl, Bib. Ind., p. 343.
119 Fatawa-i Jahanddrl,tr. M. Habib and Afsar Begam as The Political Theory of the
Delhi Sultanate, pp. 34-38.
120 Iujjatullah il-Baligha, Arabic text with Urdu translation of 'Abdu-l Haq Ijaqqani
418 IRFAN HABIB

Of great interest is the position of usury in the moral conceptions of the

popular religious teachers of the 15th and 16th centuries, represented by
Kabir, Nanak and others. The teachings of these men were derived in part
from conventional Hinduism and Islam and were, in still larger part, directed
against both. Their beliefs were simple: an unalloyed monotheism, a rejection
of all ritual, an assertion of the spiritual unity of man, and a denial, there-
fore, of the caste system. The teachers addressed themselves to the masses,
using the non-literary popular dialects of the time. Many of them came from
'he class of artisans and from other low, even menial, castes.121In many ways
one would expect them to have mirrored the feelings of the poor.
Kabir, the most prominent of these teachers, was a weaver. His verses
give us, in the form of allegories, a haunting picture of the misery of the
medieval poor.122There are wails of complaint against the oppressive shiqq-
dar, collector of land-revenue, and jagatis, collectors of tolls.123But there is
never a hostile reference to the usurer. On the contrary, Kabir seems to
regard the usurer's claim on his debtor as so natural that he does not hesitate
to justify God's claim on man on the ground that God is a usurer who has
lent man his life:

Kabir, the capital (punji) belongs to the Sah; and you waste it all;
There will be great difficulty (for you) at the time you have to
give your account.124
It is therefore probably not accidental that the Principles or Commandments
accepted today among Kabir's followers do not contain a prohibition of
usury.125
In Sikhism, the religion of the Panjab peasantry founded by Nanak,126we
find evidence of the same attitude towards usury. An exact parallel to Kabir's
acceptance of the usurer's claim on the debtor as being based on natural
justice and so analogous to God's on man, is found in the following verses of
Arjan, the fifth Guru of Sikhism:

(in parallel columns), ed. Muhammad Latif & MiCrajMuhammad (Karachi, n.d.), Vol.
II, pp. 310, 317-18.
121 Cf. my AgrarianSystemof MughalIndia,p. 333.
122 The most authentic verses of Kabir are preserved in the Gura Granth Sahib, the
Sikh scripturecompiled in 1604, and in a MS of the 17th or 18th century (not the 16th, as
its editor believed), edited by Shyamsundardasunder the title, Kabir Granthavali,Nagari
PrachariniSabha, Kashi, Vik. S. 2008. Numerous other compilations, ascribed to Kabir,
including his Bijak, appear to be later fabrications.
123 Guru Granth
Sahib, Nagari text, II, pp. 793, 1194-5.
124 Kabir
Granthavali, p. 42.
125 Cf. Rev. Ahmad
Shah, The Bijak of Kabir (translated into English) (Hamirpur,
1917), pp. 44-45.
126 For the peasant character of the Sikh community, see my Agrarian System of
MughalIndia,pp. 344-45.
 USURY IN MEDIEVAL INDIA 419
The Sahu gives countless (capital) of his own to man;
(Man) eats, drinks and uses it with pleasureand joy.
(But) when the Sahu takes back some of the amount He has
entrustedhim with (aman),
The fool becomes angry.127
Similarly,usury is not forbiddenin the scriptureof the Satnamicommunity,
which is otherwisefull of scorn and contempttowardswealth, and contains
many exhortationsagainst theft, fraud, begging, harassmentof the poor,
etc.128
This tolerant attitudetowardsusury in what we may well designatethe
Poor Man's Religion of medieval India is of no little significancefor our
study of its prevalencein the society of the time. If those who addressed
themselvesto the poor could assumethat to their hearersusury was one of
the most naturalof institutions,we must believe that the everydaylife of
the masses had been deeply permeatedwith it. And only when a very
large numberof peasantsdependedon the usurerfor their seed and cattle,
and a large numberof artisansfor their raw material,could usuryhave been
regardedby the poor not as a superfluousevil, but as a necessaryelement
in the whole productiveprocess by which they lived.

IRFAN HABIB
Aligarh Muslim University,India

127 Gura Granth Sahib, Nagari text, I, p. 268.

128 The Satnami sect arose in the 17th century. Its members were generally peasants,
lowly artisans and petty traders. See my Agrarian System of Mughal India, pp. 343-44.
The Satnami scripture is contained in Pothl Gyan Banl Sadh Satnamt, Library of the
Royal Asiatic Society, London, Hindustani MSS, No. 1.