Margayya earns a modest living by providing financial advice and helping customers with loan applications and other financial procedures; he charges a small fee for this assistance. In his town, Malgudi, he has a stand under a tree outside the main bank, Central Co-operative Land Mortgage Bank. When the bank official decides he is being a nuisance, the guard chases him away.

Margayya decides that divine intervention, specifically his devotion to the Hindu goddess concerned with wealth, Lakshmi, will aid him in his endeavors. He increases his rituals of devotion and soon his affairs improve. Margayya's interpretation of this devotion, however, is slanted more toward money than towards the goddess or holy works. As the author reveals this flaw, he foreshadows Margayya's future (negative) experiences.

Margayya's new friend Dr. Pal, author of a sex manual that combines the classic Kama Sutra with modern Western psychology, inspires a change of business direction: to publish this manual. He enlists a local printer, Madan Lal, who quickly sees the commercial value of the work that they title Domestic Harmony. Its great success sparks Margayya's social and financial rise.

Meanwhile, Margayya barely heeds his wife's counsel or his son's education, paying attention to the latter only when he fails to gain admission to university. It turns out that Balu, the son, has grown up self-centered and lazy, interested only in a sinful life. Finally, Margayya listens to his wife's fears that Balu may have died in the city of Madras. He is found alive there, however, and returns to Malgudi to get married. His father's new moneylending business makes him truly prosperous

Dr. Pal plays an active role in helping Balu get matched to a lovely wife, and it seems that all is well. However, Pal is actually a bad influence on Balu, encouraging him to waste his time and money at Pal's club. When Margayya finds out, he becomes furious with Pal and physically attacks him. The doctor in turn spreads lies about the moneylender, lies which cause his business to collapse. When Balu, unsympathetic, asks for his inheritance, his father tells him it is his heritage to be a financial expert and tells him that he should begin afresh under the tree; Margayya himself has retired.