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

Marwar - - Contents - Text Poorn­ima Subra­ma­niam Im­age cour­tesy Barons of Bank­ing: Glimpses of In­dian Bank­ing His­tory

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

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