After the cotton boom ended, why did the moneylender in the Bombay De…

The correct answer is Option (2) → He no longer had confidence in the ryots' capacity to repay.

Option (1) The government had banned moneylending in the villages. — Incorrect. Moneylending was never banned. The moneylender chose to stop lending because of falling cotton prices and rising revenue demand.

Option (2) He no longer had confidence in the ryots' capacity to repay. — Correct. As American cotton came back, prices fell and cotton fields disappeared. With the revenue demand raised too, the moneylender no longer trusted the ryots to repay, so he refused loans.

Option (3) The ryots had already risen in revolt against the sahukars. — Incorrect. The order is reversed. The refusal of loans came first and enraged the ryots; the revolt of 1875 followed it.

Option (4) He had moved all his capital into the railway trade. — Incorrect. Nothing links the refusal to the railways. Merchants and sahukars restricted advances and demanded repayment because the demand for Indian cotton was falling.