MARWARIS IN INDIAN BANKING
Bakhtiar K Dadabhoy’s book Barons of Banking: Glimpses of Indian Banking History makes for a compelling read with its insightful analysis and interesting nuggets of information that trace the history and evolution of the Indian banking system and, of cour
Book review of Bakhtiar K Dadabhoy’s Barons of Banking: Glimpses of Indian Banking History, a compelling read that traces the evolution of the Indian banking system and, of course, the inevitable role of Marwaris in it.
IN 2008, WHEN LEHMAN BROTHERS collapsed, triggering a global financial crisis, Indian economy too felt the tremors. However, the Indian financial system, especially banks, were insulated and withstood the storm. In his article in the
Mint, Tamal Bandyopadhyay writes, “… the Indian financial system largely escaped unhurt from the immediate impact of the fall of Lehman as a conservative RBI never allowed local banks to take excessive risks and built a safety wall brick by brick around the banking system.” The role of the Reserve Bank of India (RBI) in anticipating risks and putting mechanisms in place to minimise the impact cannot be overemphasised.
In his book, Barons of Banking: Glimpses
of Indian Banking History (published by Random House India), Bakhtiar K Dadabhoy traces the origin of the RBI, while detailing the struggles—such as the delay in securing a legislation, the ownership conundrum and the balancing of British and Indian interests—behind the establishment of the central bank. All of this gives us an insight into the events that led to the creation of a strong regulator in RBI. To completely understand and appreciate the evolution of the modern banking system in our country, one needs to definitely understand the history of banking in India. It is in this context that Dadabhoy’s book serves as a valuable reference point. It lucidly narrates the history of Indian banking and the role of stalwarts—Sir Sorabji Pochkhanawala, Sir Purshotamdas Thakurdas, Sir Chintaman D Deshmukh, R K Talwar, A D Shroff and H T Parekh— who shaped it through the story of five seminal banking institutions. Typically, most books of this genre tend to focus on the ‘heroes’ and either overlook other significant contributions or relegate them to mere footnotes. However, this book breaks the norm—while it details the efforts of the six leaders mentioned above, it also meticulously brings forth the significant contributions of others. As a case in point, this book beautifully documents the role of Marwari visionaries such as G D Birla, Sir Badridas Goenka, B M Birla, K K Birla and Bimal Jalan. Apart from being one of the longest serving directors of the Central Board of RBI (24 years), B M Birla also played a significant role in elevating Sir C D Deshmukh to the post of the governor of the RBI, after
the demise of James Taylor. Along with Purshotamdas Thakurdas, Birla actively canvassed support for Deshmukh’s candidature. These efforts resulted in the nation having the first Indian governor as early as 1943. Similarly, G D Birla played a significant role in determining the valuation of Indian currency and safeguarding its gold and sterling reserves. The book also reveals an interesting fact: Along with JRD Tata, G D Birla was not in favour of nationalisation of banks. However, Mrs Gandhi went ahead, and the rest, as they say, is history. Apart from these, the Marwari community made several other notable contributions: a group of Marwari businessmen started the Union Bank in 1918 with a subscribed capital of ` 4 crore; Sir Badridas Goenka, a business tycoon of his time and a prominent member of the Marwari community of Calcutta (now Kolkata), held the distinction of being the first Indian to be appointed the chairman of the Imperial Bank of India in 1933; and Bimal Jalan served as the chief economist of ICICI and then later went on to become the governor of RBI. The book also delves deep into the history of banking in India and traces the contribution of Marwaris who were major players in indigenous banking, right from the seventeenth century. It highlights some lesser-known tales of banking such as the origins of the house of Jagat Seths, founded by Hirachand Sahu in 1652. The firm lent money to the royalty which led to the title of Jagat Seth being conferred upon Fateh Chand (grand-nephew of Sahu) by emperor Mahmud Shah in 1722. The book is a treasure trove of information on the Indian banking system and serves as an important link that helps us to understand the events of the past that shaped present-day banking institutions in India. First Central Board of Directors of the RBI, which included Sir Badridas Goenka (top row, fourth from left)
L - R: An old advertisement for the ‘Home Savings Safe’ Account; the Central Bank of India building, Mumbai