04/09/2026
USURY IN ANCIENT INDIA
In Sanskrit texts, usury, or usurer, has been called Kusida, Vardhusa, Vriddhi, and Vyaja. In Europe, this is called commendation (clientage system). In the Rig Veda, Panis has been called Vekanata (usurers). The word ‘Kusid’ is mentioned in the Taittiriya Samhita, and the word Kusidin (lender) is mentioned in the Shatapatha Brahmana. The essence of the above description is that the practice of usury was prevalent in the Vedic period. Mahatma Buddha advised the king to provide usury (loans) to the traders. Therefore, Mahatma Buddha has also approved usury. He had made a rule that no person who was in debt would be allowed to enter the Buddhist Sangha. Kautilya has given a detailed description of the Mahajani system.
According to the Baudhāyana, “A Vaishya can take interest to earn his living. However, if a Brahmin takes Vardhusa like usury for his livelihood like a Shudra, then he has condemned him.” Gautamas has given recognition to Kusida in the context of a Brahmin who does not do this practice himself. Manu has not made a clear distinction between Vriddhi and Kusida. Narada has said that vardhusa (usury) is the interest charged on grains. According to him, the interest on grains can increase up to three times the initial. However, it will be considered as usury only when interest at the rate of 5% is demanded on the given grains.
In the first half of the 15th century, in Misaru Mishra’s Vivadachandra of Mithila, the grain (Vardhashikasyanna) of a usurer has been condemned, who keeps waiting for his interest to increase like waste to compost. The Dharmasutra writers (lawgiver) of the fifth to third centuries BCE recognised that only the Vaishyas earn money on interest. According to Vashishtha, no Brahmana or Kshatriya can do the practice of usury. Baudhāyana has condemned the Brahmana usurer by calling him a Shudra. The Baudhāyana allows the first two varnas to take interest from a person who does not perform religious duties, is a miser, is an atheist, or is very wicked. However, these examples are exceptional, and based on these, no Brahmin can adopt the profession of usury.
According to Gautama, even a Brahmin can borrow money on interest, but he should not do this practice directly. Manu has said precisely that a Brahmana or Kshatriya should not take interest even in times of trouble, but people of lower professions should give some interest in charity. On the other hand, Manu’s instructions to the king are that he should force the Vaishya to borrow money on interest and do other businesses. Narada is ready to allow even Kshatriyas to take up this profession but makes provision that Brahmanas should not take recourse to usury even in the greatest problems. Katyayana said that if a Brahmana (Dvija) takes up the profession of a shepherd, trader, artisan, minstrel, servant, or moneylender, then the king should treat him like a Shudra.
All around, the Smriti texts of the later Mauryan and Gupta periods generally prohibit Brahmanas from earning their livelihood via interest. In this context they are not willing to give even as much concession to a Brahmana as Baudhāyana has given. According to Yajnavalkya, one who takes responsibility for the recovery of the loan is called pratibhu, guarantor. Yajnavalkya also makes witnesses and written agreement as essential part of a loan dealing. Yajnavalkya also deals with the pledge and calls it Adhi.
According to the Garuda Purana, Brahmins and Kshatriyas can adopt the practice of Kusida in times of misery. In this regard, it has been recognized that among the means of earning a livelihood suggested by our sages in times of crisis, kusida is the most effective. Considering the eleventh century, Alberuni has written that, “Usury or taking a hundredth share of the fee is prohibited. Only a Shudra can take a share at the rate of a hundredth, provided that his share does not exceed one-fiftieth of the initial.” Taking interest in percentage form is prohibited in Islam. The management committees of the temples of South India, which were dominated by priests and Brahmins, used to lend gold on interest to the village councils and other institutions. They got interest in return.
