Which of the following is NOT correct regarding the moneylenders and moneylending during the pre-colonial rule?

Under colonial rule, the norm termed “fair interest” was followed strictly which helped borrowers significantly.

The correct answer is Option 3 - Under colonial rule, the norm termed as “fair interest” was followed strictly which helped borrowers significantly.

The correct version of OPTION 3- Under colonial rule, the norm termed “fair interest” BROKE DOWN which created situations worse for the borrowers.

Moneylending was certainly widespread before colonial rule and moneylenders were often powerful figures. 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.

All the other options are correct-

Option 1- Money lending was widespread even before colonial rule.
Option 2- In the pre-colonial period, one general norm in moneylending was that the interest charged could not be more than the principal.
Option 4- 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.