The lives of us human beings revolve around one common denominator, the paper which divides us into classes and our economies into developmental stages. Money, a concept which has been around since the very inception of mankind itself. Well , it wouldn’t be incorrect to state that barter system preceded the existence of money, and continues to be used in modern times as well. But the definition of money has changed multiple times over many centuries, and so has the definition of the people who play with it.
Money was seen to have appeared in existence in Egypt and Mesopotamia in 2500BC, where gold bars were traded for commercial purposes and their weight was used to predict their values. Then followed currencies of metallic, silver and gold coins , bringing us to the paper currency we use. The need for banking and money lending was created as soon as money was. In Roman times baking was left to the private individuals who lent to farmers , an amount which they termed as ‘harvest day loans’ and they were later replaced by capitalists as the empire neared its end. These individuals were the rich, high positioned officials who used money lending to earn greater returns.
In the dark and the middle ages (11th-12th and 15th– 16th centuries) the position of lending money was limited to Jewish moneylender as Christians were prohibited from lending money with any motive of earning back interest, by their religious leader’s decree of lending of money. And therefore the practice continued till these Jews were clearly seen as becoming wealthy, following which the Christian decree was reformed .
We can credit the procedure of collateral lending to Greek and Roman times, where a fee was charged before the collateral commodity could be given back to the borrower. The interest charged as fee was low and the motive was to lend money while reducing the risk to the lender.
In today’s world the money lending scenario has become a huge industry where an individual has multiple choices to borrow from and multiple ways to have the amount be repaid with certain contingencies attached. However to display the situation broadly, we can divide the money lenders into formal and informal money lenders. The formal money lenders are visibly the banks , cooperatives and other formal institutions such as IMF(international monetary fund) and World Bank. Whereas the informal money lenders may vary from one’s relatives , friends to the landlords that charge exorbitant amounts of interest on every lending.
Like every other activity, money lending today is a business. It has came a long way , as did money. The players too have seen a change of tides with time and the motives have become more commercial than before. We live in a world where every individual, well off or not, indulges in this money play. Either they have their hands in borrowing or in lending, none have stayed out of this trade. Money lending has a future stretched out till money has, or maybe even beyond it, but not a step before it.