HistoryModern India: Colonialism and the Countryside

Before colonial rule, which general customary norm limited what a mon…

Before colonial rule, which general customary norm limited what a moneylender in the Deccan could charge a ryot?

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → The interest charged could not be more than the principal

Option (1) No interest could be charged in a year of crop failure — Incorrect. Relief in bad years sounds kind. The Deccan norm, however, capped the total amount of interest on a loan.

Option (2) The interest had to be paid in grain after each harvest — Incorrect. This is about the form of payment. The customary norm limited how much interest could be taken.

Option (3) The rate of interest was fixed each year by the village panchayat — Incorrect. The norm did not depend on any village body fixing rates. It set an upper limit tied to the loan itself.

Option (4) The interest charged could not be more than the principal — Correct. The norm that interest could not be more than the principal defined fair interest. It broke down under colonial rule; one moneylender charged over Rs 2,000 as interest on a loan of Rs 100.

NCERT (2026-27): “3.6 The experience of injustice …
A variety of customary norms regulated the relationship between the moneylender and the ryot. One general norm was that the interest charged could not be more than the principal. This was meant to limit the moneylender’s exactions and defined what could be counted as “fair interest”. Under colonial rule this norm broke down. In one of the many cases investigated by the Deccan Riots Commission, the moneylender had charged over Rs 2,000 as interest on a loan of Rs 100. In petition after petition, ryots complained of the injustice of such exactions and the violation of custom.”