Question

why is a money lender paid interest even though he does nothin by way of production of goods

Answer 1

The moneylender is paid interest because the borrower is able to use money that he would otherwise not be able to use. The practice enables people without money and people with money to mutually benefit from the wealth of the latter. At the same time countless people who are not involved also benefit by means of access to the goods and services made possible by the exchange.