It seems cruel that Maharaj would take all of Kashiram's money and force him into debt. Why would he do that?

The actions of Maharaj toward Kashiram, while appearing harsh on the surface, are framed within the source text as a compassionate spiritual lesson rather than an act of cruelty. According to Chapter 0, Kashiram had developed a subtle pride, believing he had the "power to give." This pride was an obstacle to his spiritual progress. To remove this hindrance, Maharaj initiated a 'Leela' by relentlessly demanding Dakshina, even after Kashiram's money was gone, forcing him to borrow. The entire purpose was to make Kashiram realize his own powerlessness and remove his pride. Once this spiritual lesson was learned, his financial prosperity was restored.