Statistics on Household indebtedness in India sourced from NSS ministryof Statistics show that both rural and urban folks
have highindebtedness with the rural percentage showing a higher rise. .In ruralareas the dependence on money lenders is 54% despite the lendinginterest rate being above 30%.The author opines that the ubiquitousIndian village
moneylender, despite his much maligned monstrosity, isan indispensable link in rural credit and we can ill afford to shut oureyes to his contribution to the rural economy.Despite his pervasivepresence , somehow, the moneylender in India, is not consideredlegitimate by the policy planners. He is not allowed to borrow as perthe current bank regulations, although, a butcher ,a corporate tycoon,a share market operator can all borrow money from banks. .A successfullender is also one who borrows efficiently . The modern acronyms ofmicro financing are based on the same principle. Governments may waiveloans. But a moneylender cannot afford to. His risks are higher. Unlesshe can access funds, he cannot perform his role fully. We need to usethis link with ingenuity to revamp the rural credit scenario. The factthat money lenders are not given to western thinking does not diminishtheir role. They are indispensable with their extensive network, highcredibility and their capacity to make credit available in a timely andflexible manner without tedious paper work. Moreover, this much hatedmoney lender is far less dangerous than the present- day marauders inthe guise of global financial institutions whose grandiose proposalshave ruined several third world countries financially. But our poormoney lender seems to deserve no ‘credit.’ as the West hasn’t given itapproval nod.It is time we legitimized the traditional money lender asa strong
channel partner for the banks to channel credit to remoteparts on the country in a systematic manner for greater economic growthand thus help the grassroot beneficiary.