With the advent of the French in the coastal village of Puthucherry (Pondicherry) in 1674 the inland and overseas trade developed slowly. The settlement also developed gradually into black town and white town. Merchants and traders flocked in due course of time to conduct trade and commerce. At this time, the credit system also came to be organized by the indigenous bankers. The issuance of hundis had enabled the drawee to transfer money from Pondicherry to other important towns in South India. This paper examines the system of credit, treatment of debtors, and the other related problems faced by the bankers and financiers in Pondicherry besides the salient features of the native customs and legal system then in vogue.

Pondicherry became the administrative headquarters of the French in India in 1701. It was an important center of French trade and commerce since 1674. The opening of a mint at Pondicherry in 1736 testified to the growing financial importance of the town that must itself have added a few more bankers and merchants to the existing number. There were brisk activities in indigenous banking and the bankers had high social status. They had developed contacts with the Nawab of Arcot and the French by providing finance. The sarrafs functioned as money changers and moneylenders. They charged batta (discount) on degraded coins at the time of their conversion into current one which had full value. Leading sarrafs controlled even the bullion market, the source of currency as well as its circulation in Pondicherry. They organized the credit system mainly in the nonagrarian sector of the economy. Cash credit facilities to cultivators in the suburbs of the town were also made available. The bankers were the financial machinery for credit and exchange. Merchant capital and commercial organization were developed by them in the town. Thus, there was highly efficient local credit market and it helped in organizing Indo-French trade. These saraffs contributed towards mitigating the crisis by steady flow of cash into the settlement. The French Company was in need of them and they flourished under their protection and patronage. However, there were litigations and at times the sarrafs could not operate smoothly. They suffered from the nonpayment of defaulters. There are umpteen cases which highlight the treatment meted out to the borrowers in Pondicherry. A few cases are cited here to get a glimpse of the situation and the nature of treatment given to the debtors in Pondicherry. It is useful to cite them to know the actual situation and the indigenous system of customs from the failure of the defaulters to pay back.

Debts, Treatment of Debtors and the Practice of Civil Law in Pondicherry (1743-1778), Pondicherry, system, bankers, treatment, indigenous, market, organized, settlement, commerce, defaulters, customs, administrative, conversion, currency, cultivators, banking, economy, exchange, financiers, glimpse, headquarters, IndoFrench, litigations