Dayal came from a family that had initially moved from Bahuara, Ara district, Bihar as indentured labourers to Transvaal.

His father Babu Jairam Singh and Mohini Devi became free citizens in 1884 and settled in Johannesburg, where Dayal was born.

In 1922, his wife Jagrani Devi died and Dayal visited India again, attending the Congress session at Gaya.

Dayal founded a Pravasi Bhawan in his home village[clarification needed] at Bahuara, Bihar with a library and school in 1926–27.

In 1930 he took part in Gandhi's Satyagraha protests in India and was booked for seditious speeches (including those delivered by him in Fiji) on March 29.