Meaning, Function, and Importance of Moneylenders


Those who specialise in lending are known as moneylenders.They are divided into the professional and non-professional categories.

Those whose main line of work is lending are considered professional moneylenders. The non-professional moneylenders, on the other hand, are those who work in another profession but also lend money on the side.

Landlords, farmers, shopkeepers, traders, affluent widows, seniors, attorneys, teachers, and anybody else with extra money are among them. Lenders of money, both professionals and amateurs, can be found in both urban and rural settings. However, this division is not completely clear-cut because an urban merchant may also lend to a farmer whose produce he purchases.

Functioning of Lenders:

The roles of moneylenders include:

(1) The primary duty of moneylenders is to make quick loans. Loans may be provided for consumer goods, to fulfil social and religious duties, or to cover a farmer’s needs for fertiliser, animals, seeds, and other items.

(2) Collateral for loans is often provided by the borrower as their own personal security. Loans are routinely given out, however in urban areas they are frequently secured by expensive objects, whereas in rural areas they are frequently secured by land or crops.

(3) The borrowers approach them directly and informally since they know them personally.

(4) The moneylenders generally lend their own funds.

(5) The amateur moneylenders favour lending in kind.

(6) Since the moneylenders are aware of the borrowers’ creditworthiness first-hand, they have the option of being strict or accommodating when making loans, assessing interest, and collecting on them.

(7) They impose exorbitant interest rates.

(8) Moneylenders in rural areas wield considerable clout and employ pressure tactics to compel repayment of loans, including taking over cultivators’ land forcibly, alienating castes, applying pressure to panchayats, etc.

(9) Moneylenders also engage in unethical practises in rural areas, such as manipulating accounts, withholding interest in advance, demanding gifts, coercing the borrower into providing free services, demanding donations, obtaining the borrower’s thumbprint on blank paper, failing to provide receipts for the payment of interest and principal, using the borrower’s land or house deed as collateral, and pressuring the borrower-farmer to sell his produce in advance at a low price.

The significance of lenders:

Due to the inadequateness of institutional lenders like commercial banks and cooperative banks, moneylenders are extremely best personal loan in ang mo kio. They provide loans for consumer requirements, religious rites, social gatherings, and other productive uses like raising cattle, seeds, and fertiliser.


The fact that a professional moneylender additionally offers items for daily needs makes him more valuable. The borrowers approach the moneylender informally and directly because they have had intimate touch with him. A moneylender is often regarded as the friend, advisor, and helper of the people in rural areas.


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