Indian and Pakistan Year Book and Who's who

Banking.

An event of great importance in the history This system continued with only minor

of Indian banking was the formation on the 27th January 1921 of the Imperial Bank of India by amalgamation of the three Presidency Banks of Bengal, Bombay and Madras.

The idea of a Central Banking establishment for British India was mooted as early as 1836, and was the subject of a minute by Mr. James Wilson, when Finance Member, in 1859. Again, in 1867 Mr. Dickson, the well-known Secretary of the Bank of Bengal, submitted detailed proposals for an amalgamation of the three Presidency Banks. On various later occasions the matter was brought forward without result and

modifications until 1920. During the war, however, the policy was deliberately adopted of reducing the amount of the balances held in the Reserve Treasuries and leaving much larger balances with the Headquarters of the Presidency Banks in order to assist the money market.

The Imperial Bank :-Under the Imperial Bank of India Act (XLVII of 1920), the control of the Bank is entrusted to a Central Board of Governors with Local Boards at Calcutta, Bombay and Madras and such other places as the Central Board, with the previous sanction

it was discussed by the Chamberlain Commission of the Governor-General in Council may deteron Indian Finance and Currency in 1913. mine. The Central Board of Governors consists The present scheme which has come to fruition ofwas however the result of a rapprochement on the part of the Banks themselves as a result of the experience gained during the war and the realisation of the desirability of strengthening and extending the Banking system in India,

The Presidency Banks: -The history of the Presidency Banks in their relationship with Government falls into three well-defined stages. Prior to 1862 the Presidency Banks had the right of note issue, but were directly controlled by Government and the scope of their business was restricted by their charters. The second period was from 1862 to 1876. In 1862 the Banks were deprived of the right of note issue, though by their agreements of that year they were authorised to transact the paper currency business as agents of Government. As compensation for the loss of their right of issue, they were given the use of the Government balances and the management of the treasury work at

(a) Managing Governors not exceeding two in number, appointed by the Governor-General in Council on recommendation by the Central Board; (b) the Presidents, Vice-Presidents and Secretaries of the Local Boards; (c) the Controller of the Currency, or other officer nominated by the GovernorGeneral in Council; and

(d) not more than four non-officials, nominated by the Governor-General in Council.

Representatives of any new Local Boards, which may be constituted, may be added at the discretion of the Central Board.

The Controller of the Currency and the Secretaries of the Local Boards are entitled to attend the meetings of the Central Board but not to vote under the agreement with

the Presidency towns and at their branches. Government. The Governor-General in Council

The old statutory limitations on their business were at the same time greatly relaxed, though the Government's power of control remained unchanged. In 1866 the agreements were revised and the paper currency business was removed from their control and placed under the direct management of Government. The third period dates from the Presidency Banks Act of 1876 by which nearly all the most important limitations of the earlier period were reimposed. Put very briefly, the principal restrictions imposed by this Act prohibited the

is entitled to issue instructions to the Bank in respect of any matter which in his opinion vitally affects his financial policy or the safety of the Government balances, and if the Controller of the Currency or such other officer of Government as may be nominated by the GovernorGeneral in Council to be a Governor of the Central Board shall give notice in writing to the Managing Governors that he considers that any action proposed to be taken by the Bank will be detrimental to the Government as affecting the matters aforesaid, such action shall

Banks from conducting foreign exchange not be taken without the approval in writing business, from borrowing or receiving deposits of the Governor-General in Council. Under payable out of India, and from lending the Imperial Bank of India Act provision was

for a longer period than six months, or upon mortgage or on the security of immovable property or upon promissory notes bearing less than two independent names or upon goods, unless the goods of the title to them were deposited with the Bank as security. At the same time Government abandoned direct interference in the management, ceasing to appoint official directors and disposing of their shares in the Banks. The Banks no longer enjoyed the full

made for the increase of the capital of the Bank. The capital of the three Presidency Banks consisted of 31 crores of rupees in shares of Rs. 500 each, fully subscribed. The additional capital authorised was 7 crores in shares of Rs. 500 each, of which Rs. 125 has been called up, making the present capital of the Bank Rs. 111 crores, of which Rs. 5,62,50,000 has been paid up. The Reserve Fund of the Bank is Rs. 5,07,50,000 and the Balance Sheet of 30th

use of the Government balances. Reserve June 1927 showed the Government Balance Treasuries were constituted at the Presidency at Rs. 10,04,43,927, other deposits at towns into which the surplus revenues were Rs. 73,17,24,712 and cash Rs. 22,83,65,964 drawn and the balances left at the disposal of with a percentage of cash to liabilities of the Banks were strictly limited.

27.317.

Class of Business: -The Imperial Bank of India Act follows the Presidency Banks Act of 1876 in defining absolutely the class of business in which the Bank may engage, though the older limitations are modified in some minor points. It permits for the first time the constitution of a London Office and the borrowing of money in England for the purpose of the Bank's business upon the security of assets of the Bank, but not the opening of cash credits, keeping cash accounts or receiving deposits in London except from former customers of the Presidency Banks. The Act provides for an agreement between the Bank and the Secretary of State, and this agreement, which was signed on the 27th January 1921 and is for a period of ten years determinable thereafter by either party with one year's notice, provides, inter alia, for the following important matters:

(1) All the general banking business of the Government of India is to be carried out by the Imperial Bank.

(2) The Bank will hold all the Treasury Balances at Headquarters and at its branches. This involves the abolition of the Reserve Treasury system.

(3) Within five years the Bank undertakes to open 100 new branches of which the Government of India may determine the location of one in four. The branches and agencies of the three Presidency Banks prior to the date of amalgamation numbered 69, including the Colombo branch of the Bank of Madras. The Bank of Bengal had no branches prior to the proposal to transfer Government business to the Bank in 1861-62 but no less than 18 branches were established before 1868.

(4) The management of the Public Debt will continue to be conducted the Bank for specified remuneration

THE DIRECTORATE.

Managing Governors

{

Sir N. M. Murray, Kt.

(O. A. Smith, Esquire (Offg.)

Presidents, Vice-Presidents and Secretaries of the Local Boards.

In Schedule 1, Part 1, of the Act, the various descriptions of business which the Bank may transact are laid down, and in Part 2 it is expressly provided that the Bank shall not transact any kind of banking business other than that sanctioned in Part 1.

Briefly stated, the main classes of business sanctioned are:

(1) Advancing money upon the security of:(a) Stocks, &c., in which a trustee is authorised by Act to invest trust monies. (b) Securities issued by State aided Railways, notified by the GovernorGeneral-in-Council.

(d) Goods, or documents of title thereto, deposited with, or assigned to the Bank.

(e) Accepted Bills of Exchange or Pro. Notes.

Fully paid shares and debentures of Companies with limited liability or immoveable property or documents of title relating thereto, as collateral security where the original security is one of those specified in a, b, c, d and, if authorised by the Central Board, in e.

Trichur.

Trivandrum.

Tuticorin.

Ujjain.

Vellore.

Viramgaum,

Vizagapatam,

Vizianagram.

Wardha.

Yeotmal.

(2) With the sanction of the Local Govern. ment, advancing money to Courts of Wards upon security of estates in their charge.

(3) Drawing, accepting, discounting, buying and selling bills of exchange and other negotiable securities payable in India and Ceylon and, subject to the directions of the Governor-General in Council, the discounting, buying and selling of bills of exchange payable outside India for and from or to such Banks as may be approved.

(4) Investing the Banks' funds in the securities referred to in (1) a, b, c.

(5) Making Bank Post Bills and Letters of Credit payable in India and Ceylon.

(6) Buying and selling gold and silver. (7) Receiving deposits.

(8) Receiving securities for safe custody.

(9) Selling such properties as may come into the Bank's possession in satisfaction of claims. (10) Transacting agency business on commission.

(11) Acting as Administrator, for winding up estates.

(12) Drawing bills of exchange and granting letters of credit payable out of India for the use of principles in connection with (11) and also for private constituents for bona fide personal needs.

(13) Buying, for the purpose of meeting such bills, &c., bills of exchange payable out of India at any usance not exceeding six months.

(14) Borrowing money in India. (15) Borrowing money in England upon security of assets of the Bank, but not otherwise. The principal restrictions placed on the business of the Bank in Part 2 are as follows:

(1) It shall not make any loan or advance :(a) For a longer period than six months; (b) upon the security of stock or shares of the Bank

(c) save in the case of estates specified in Part 1 (Courts of Ward) upon mortgage or security of immoveable property or documents of title thereof.

(2) The amount which may be advanced to any individual or partnership is limited.

(3) Discounts cannot be made or advances on personal security given, unless such discounts or advances carry with them the several responsibilities of at least two persons or firms unconnected with each other in general partnership.

The Balance Sheet of the Bank as at 30th June 1927 was as follows:-
LIABILITIES.

Subscribed Capital