one would be allowed to use the name of a bank or any derivative from it unless his name was included in the register. On all such registered banks such obligations as the publication of accounts, and so forth, would be imposed as might be thought desirable.
In the meantime the Government itself had in 1918-21 a bill under consideration which was intended to include the principal points put forward. But during 1921 it seemed to have found its resting-place in the archives of the Board of Trade.
Certainly the suggested register of bankers carries us a step farther than previous efforts have done. Sir John Paget, the eminent banking counsel, had constantly urged the necessity for reform in this matter, and in a letter to the Journal of the Institute of Bankers he pointed out in 1920 that the register plan offered finality where finality was sorely needed, elasticity where experience called for change. As he said, the register need not necessarily be either an Index Expurgatorius or a Book of the Righteous; it would be a true guide and friend. It would not be derogatory to bankers, for registration is both recognized and adopted in all professions. The Stock Exchange has its official list of members; the Law List is the register of counsel and solicitors, and when we come to medicine and surgery we find in the Medical Register and the General Medical Council the complete exemplar of a register and tribunal which, as Sir John Paget has argued very reasonably, might well be the pattern to be followed by the bankers. Unfortunately the blunder made by the Government in 1919 in introducing a “banks supervision” bill (for controlling amalgamation), which was so badly drafted that it had to be withdrawn, seemed to have discouraged official action.
Overseas British Banking.—The recent tendency of the English joint stock banks to take an interest in overseas banking has already been mentioned. Apparently, they had not yet in 1921 reached the point of carrying the process of amalgamation into unions with the colonial banks, though, as it happens, in 1919, pourparlers were taking place between representatives of Lloyd's Bank and the National Bank of India for the purchase of the shares of the latter. However, before the negotiations had reached a head the British Treasury intervened and vetoed the transaction. Nevertheless, there was an important development in India, namely the amalgamation of the three Presidency Banks, the Bank of Bengal, the Bank of Bombay, and the Bank of Madras, which, under an Act passed by the Indian Legislative Council in 1920, became united on Jan. 27 1921, and were henceforth to do business as the Imperial Bank of India. As is well known, the old Presidency Banks under the former regime were restricted in their operations; they were looked upon as semi-official institutions and as “bankers' banks.” Under the Presidency Banks Act of 1876 they were prohibited from doing foreign exchange business, from borrowing or taking deposits payable outside India. They were not permitted to make loans for longer periods than six months, or to advance upon mortgage, or on immovable property, or upon promissory notes bearing less than two independent names, or upon goods, unless the goods or the title to them were deposited with the banks as security. Under the constitution of the new Imperial Bank of India, these disabilities are to a large extent removed; the bank is empowered to do most of the business which the Presidency Banks were formerly prohibited from doing. Besides acting as the bank for the Government, the Imperial Bank is permitted to have an office in London, and to rediscount bills for the Exchange Banks and other banks. It does not, however, compete with the Exchange Banks in ordinary exchange business. The appointment of the bank as the Indian Government's sole bank in India will make for economy, for it will enable the Government to abolish the expensive Reserve Treasuries in India, and the business hitherto conducted in that connexion by the Government will be done by the Imperial Bank. To render this possible, the Imperial Bank undertook to establish and to maintain within five years no fewer than 100 new branches, not less than one-fourth of which would be opened at such places as the Government might consider desirable.
It will be convenient at this point if we give particulars of the capital, etc., of the banks before the amalgamation and the position as it stood in June 1921.
Resources of the Indian Presidency Banks before They
Were Absorbed by the Imperial Bank of India
(Lakhs of rupees.)
| Capital. | Reserves. | Deposits. | Cash. | ||
| Public. | Private. | ||||
| Bank of Bengal | 200 | 210 | 388 | 3439 | 1244 |
| Bank of Bombay | 100 | 125 | 187 | 2650 | 980 |
| Bank of Madras | 75 | 45 | 124 | 2228 | 455 |
| Total | 375 | 380 | 699 | 8317 | 2679 |
(Figures are in lakhs of rupees—one lakh = 100,000 rupees)
Capital, etc., of the Imperial Bank of India, May 20 1921
(000's omitted.)
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The establishment of this bank is, of course, a great step forward in the banking development of India; it centralizes the operations of three large banks, but gives them larger working resources and a much larger scope. A further advantage is found in the fact that although the Government is fully represented the main working of the central concern is in the hands of private individuals. The president and vice-presidents are the representatives of the shareholders, and practically the only Government officials on the central board are the controller of the currency, not more than four nominees of the Government, and one or two managing governors appointed by the Indian Government in consultation with the central board. The first two governors were Sir N. Warren and Sir R. Aitken, who were formerly secretaries and treasurers of the Banks of Bengal and Bombay respectively, whilst the first London manager was Sir Bernard Hunter, who held formerly the position of secretary and treasurer of the Bank of Madras. Subsidiary to the central board, forming the main governing body, there were to be local boards, the latter being the existing boards of the amalgamated institutions in the three presidency towns. The central board was to function much in the same way as the Bank of England does in England. It deals with matters of general policy, “such as the movement of funds from one part of India to another, the fixation of the Indian Bank rate, which will in future be uniform for the whole of India, and the publication of the weekly statement.”[1]
The local boards, under the general control of the central board, were to have a very free hand in administering the affairs of the bank, and, altogether, the whole administration was designed to carry on the work of the previous Presidency Banks with the minimum of disturbance and the maximum of efficiency.
Precisely what business the Imperial Bank was in 1921 authorized to transact was set out in the following schedule of the Imperial Bank of India Act:
The bank is authorized to carry on and transact the several kinds of business hereinafter specified, namely:—
(a) The advancing and lending money, and opening cash-credits upon the security of: (I.) stocks, funds and securities (other than immovable property) in which a trustee is authorized to invest trust money by any Act of Parliament or by any Act of the Governor-General in Council and any securities of a local Government or the Government of Ceylon.
(II.) Such securities issued by State-aided railways as have been notified by the Governor-General in Council under section 36 of the Presidency Banks Act, 1876, or may be notified by him under this Act in that behalf.
(III.) Debentures or other securities for money issued under the authority of any Act of a legislature established in British India by, or on behalf of a district board.
- ↑ Economic Journal, vol. xxxi.
