Usury in Hinduism: Understanding the Permissible and the Forbidden

The concept of usury, or lending money at exorbitant interest rates, has been a subject of debate and discussion across various cultures and religions. In Hinduism, the treatment of usurious practices is particularly significant due to its intricate legal and spiritual codes. Let us delve into the nuances of usury in Hindu tradition, drawing from scriptures such as the Mahabharata and the Manusmriti.

Usury and Exorbitant Interest in Hindu Scriptures

According to the holy text Mahabharata, adherence to proper conduct is paramount. Bhishma, one of the foremost characters in the epic, states, 'They who betake themselves to improper conduct, they who take exorbitant rates of interest, and they who make unduly large profits on sales have to sink in hell.' This verse clearly indicates that engaging in usurious practices is seen as a form of improper conduct that leads to negative consequences in the afterlife.

The Manusmriti, an ancient legal text, further clarifies the permissibility of interest. In Manu 8:140 and Manu 8:141, it is mentioned that a moneylender can stipulate an increase based on the rates allowed by Vasishta, taking a monthly amount that does not exceed 1.25%. Additionally, it is noted that remembering the duty of good men, taking a monthly interest of 2% is permissible, as one who takes 2% does not become a sinner for gain.

The Kautilya Artha Shastra also provides guidance on interest rates. It states that persons exceeding the aforementioned rate of interest would be punished with the first amercement, and those who participate in transactions, knowingly or unknowingly, would be required to pay a fine that is half of the above mentioned fine.

The Social and Ethical Implications

Although the Vedas and Dharmashastras (scriptures on law and morality) permit interest rates within certain limits, it is essential to understand the social and ethical implications of these practices. The conversion of religion through the acceptance of bribes is as bad as usury. This highlights that the moral principles underpinning religious practices extend beyond mere legal permissibility.

From time immemorial, people have exploited others' needs for profit. However, this practice is not sanctioned by Hindu social norms. Despite the ethical concerns, it is pertinent to acknowledge that such practices provide a means for the needy to access resources. However, the inherent imbalance and exploitation in such transactions are questionable.

Usury and Dharma: A Holistic Perspective

Usury is fundamentally an illegal and unreasonably high-rate of interest lending, which aligns with the broader Hindu principle of Dharma. Dharma, which encompasses moral, ethical, and social duties, dictates that exploiting the poor through high-interest loans is an act of adharma (unrighteousness). Lord Krishna, in the Bhagavad Gita, warns against the triple doors to hell—lust, anger, and greed, stating, 'Trividham narakasyedam dwaaram naashanamaatmanahn Kaamah krodhastatha lobhastasmaadetattrayam tyajet' (Chapter 16, Verse 21).

The concept of usury as a means of socioeconomic exploitation of the poor is unequivocally against the fundamental principles of Dharma. This conclusion is drawn not necessarily from a need to cite specific legal or scriptural texts but rather by applying one's own intelligence and moral judgment.

Conclusion: Adharma and Usury in Hinduism

In summary, usury, specifically lending at unreasonably high rates of interest, is considered adharma in Hinduism. This practice is linked to the broader moral principles of Dharma, which emphasize ethical conduct and the prevention of exploitation. Whether sanctioned by ancient texts or not, the inherent immorality of usury is clear, reflecting the fundamental moral and ethical values of Hindu society.

For those seeking to uphold the principles of Dharma, it is essential to recognize the dangers of usury in terms of exploitation and the ethical harm it causes. By understanding and internalizing these teachings, individuals and societies can work towards more equitable and just practices in financial lending and transactions.