‘Can you imagine that I am handing out interest-free loans right now?’ I was asked in December 2016 by a moneylender in Banaras (Varanasi) who normally charged a rate of 30 per cent per month. A few weeks earlier the Indian government overnight had withdrawn banknotes of 500- and 1,000-rupee denominations, the vast majority of all cash in circulation – certainly one of the biggest policy misadventures in recent history. Since the ‘demonetization’ misadventure had not included any apparent planning for a re-monetization, trade in the city's ‘bazaar’ had collapsed, by some local estimates upwards of 80 per cent. While many extra-legal lenders were simultaneously engaged in commerce, and therefore affected by the policy, it also constituted a business opportunity. Old denominations could be exchanged for new ones only with significant difficulties, in an endless-seeming array of fresh regulations restricted to very low amounts. For richer Indians, exchanging old banknotes that had become practically worthless depended considerably on finding poorer people who would exchange them in their stead. The market value of the ‘old’ banknotes in Banaras, as elsewhere, dropped drastically. They became available to buyers within days of the policy announcement for 75 per cent of their nominal value. By early December this value had dropped to 60 per cent, and to 40 per cent around mid-December. One way of getting the devalued banknotes into the banking system hinged on loans by moneylenders. The depositors – frequently depicted obnoxiously as ‘money mules’ or chotus (lit. little ones) in the parlance of India's upper-middle classes – made deposits consisting of (frequently interest-free) loans given to them by moneylenders. Consisting of devalued banknotes, these loans thus entered the banking system, and could be withdrawn in legal tender a few months later to repay the moneylenders. For the depositors, this practice brought about a significant respite from economic distress.

When I asked the lender why he did not charge interest, he proceeded to outline an argument that I had already become familiar with in my fieldwork. The agreed-upon interest rates for a transaction mostly served as a guideline. Eventually, given their exceedingly exploitative character, almost all debtors would default.