The Hindu Business Line : Tracing a financial legacy

PRINCE Dwarkanath Tagore, a pioneer of Indian industry, did business with it. A Governor-General actually wrote a complimentary note, when a deal fell through, because the bank took a strong view of a few annas that went missing. It firmly said "No" to lending against shares of banks or on mortgage of houses.

Welcome to a little bit of history. Not a little, really, considering the mammoth effort that is being put in by the State Bank of India which, quite a long while ago, was known as the Imperial Bank of India.

SBI is creating what will easily be the single-point source for business historians who wish to delve deep into its chronicles. And the chronicles number no fewer than 12,000 documents, all of which will be stored in the archives that are being set up.

"This will be a very serious affair. We are attempting what no one has done before", said an SBI executive, who is closely associated with the venture. Given the exhaustive legacy, a lot of work will have to be carried out, particularly with regard to the layout of the archival material.

Not without a sense of pride, SBI executives refer to the bank's beginnings that go back to the early years of the 19th century, to the establishment of the Bank of Calcutta (June 2, 1806).

Three years and a charter later, it emerged as the Bank of Bengal — the first joint-stock bank in British-ruled India that was sponsored by the then Government of Bengal. It was later followed by Bank of Bombay and the Bank of Madras. The three institutions remained at the apex of modern banking in the country till 1921, when they were amalgamated to form the Imperial Bank of India.

Business Line took a brisk walk through history, as documented by SBI, and found the following nuggets:

Loans were restricted to Rs 1 lakh, while the period of accommodation was limited to a mere three months. The security for such loans included what was generally called `Company's Paper,' bullion and jewels

The highest rate of interest was 12 per cent. Loans against opium, indigo, salt and cotton were granted. Such finance by way of cash credits gained ground only from the third decade of the 19th century.

Indians were the principal borrowers against deposit of Company's Paper. The business of discounts (on private and salary bills) was a near-exclusive domain of Europeans and their partnership outfits.

When India became independent, the Imperial Bank had a capital base of Rs 11.85 crore, reserves included, and advances of Rs 275.14 crore. It had a network of 172 branches, and over 200 sub-offices were spread all over the country. This was the base camp, from where the SBI that we know today began its story.

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