Sterling balances
£48m
No figure for 1938
Reserve Bank of India · 1 June 1939
Governor Sir James Taylor circulated to the Local Boards a memorandum of proposals for an Indian Bank Act to bring the whole joint-stock banking sector within the RBI's orbit
VerifiedOfficial record. Source: RBIH1 ch. 5
Reserve Bank of India · regulation · 3 September 1939
Exchange control introduced in India on the outbreak of war; the RBI both administered the control and advised Government on it
VerifiedOfficial record. Source: RBIH1
Reserve Bank of India · 15 November 1939
first cancellation
First cancellation of a sterling loan under the repatriation scheme, the opening of the war-time repatriation of India's sterling debt
VerifiedOfficial record. Source: RBIH1
Reserve Bank of India · regulation · 1 December 1939
Non-scheduled banks' demand liabilities and cash in hand compiled from returns under section 277L of the Indian Companies Act, 1913, for the period December 1939 to June 1948
VerifiedOfficial record. Source: BMS1954
Banking · scandal
directors' and relatives' debts Rs 25.5 lakh at suspension
"In sentencing the miscreants to heavy fines and terms of imprisonment, the Court in Trivandrum cited grave instances of falsification of balance-sheets." The 1937 balance sheet stated advances to directors at about Rs 6 lakh when the true figure was not less than Rs 14 lakh; investments in shares of more than Rs 6 lakh book value were not disclosed at all; bad and doubtful debts were reduced from more than Rs 8½ lakh to less than Rs 1½ lakh; profits of about Rs 2½ lakh were declared when there was a loss of more than Rs 2½ lakh even after the general reserve was used up. Directors' and relatives' debts reached Rs 25½ lakh by the date of suspension and were not shown as such.
ReportedPeer-reviewed. Source: Muranjan, Modern Banking in India, pp. 320–321
All joint-stock banks
Governor Taylor's memorandum: a clear-cut definition of "banking" (accepting deposits on current account or otherwise subject to withdrawal by cheque) and of a "banking company"; companies carrying on banking to use "bank"/"banker"/"banking" in their names and no others to use them; the s.277F list of permitted business incorporated; minimum capital standards varying with area of operation and population of towns; a minimum proportion of assets to be held in British India and in liquid form; provisions to expedite liquidation; incorporation of relevant Companies Act provisions. Co-operative banks excluded. The Governor opposed extending the Act to private and indigenous bankers, on the grounds that they rarely took current-account deposits, that regulation of usurious moneylending was Provincial and probably ultra vires a Central Act, and that assistance would be difficult without accounts segregating banking from other business
VerifiedOfficial record. Source: RBIH1 ch. 5
Bank supervision
The Governor was not inclined to provide for elaborate periodical inspection by the Bank or a separate Government Inspection Department, which would "merely tend to create a false sense of security in the minds of the public and throw all the onus of responsibility on those responsible for inspection in the event of a bank failing"; he thought legal power to summon books "would be somewhat invidious to give to the Reserve Bank, as this would tend to give the latter the role rather of a policeman than of a colleague and helper of other banks"
VerifiedOfficial record. Source: RBIH1 ch. 5
Commercial banks
From 1939 through February 1944 the Bank inspected about thirty banks
VerifiedOfficial record. Source: RBIH1 ch. 15
foreign exchange
Exchange control introduced on the outbreak of war; the RBI administered it and advised Government; it fed the sterling balances by obliging residents to surrender foreign currency to the RBI
VerifiedOfficial record. Source: RBIH1; KAUS1966
banking statistics
Compulsory statistical returns for non-scheduled banks, the basis of the RBI's non-scheduled bank data for December 1939 to June 1948
VerifiedOfficial record. Source: BMS1954
interest rates and liquidity
"as in most countries the pursuit of cheap money policy during the war period became a well accepted objective. However, the Bank did employ open market operations fairly successfully"
VerifiedOfficial record. Source: RBIH1
Indian States
Because the Indian States "were part of the sterling area", the Political Department of the Government of India arranged with most States for the enactment of parallel legislation delegating to the Reserve Bank powers to operate exchange control in their territories, "with a view to ensuring uniformity in the system of exchange control throughout the country"
VerifiedOfficial record. Source: RBIH1, "Exchange Control" (archive.org)
central bank balance sheet
The proviso to s.33(3) capped rupee securities in the Issue Department; the India Office and the RBI sought its amendment to permit large-scale repatriation financing. Kaushal records that "Sections 40 and 41 of the Reserve Bank Act were bitterly criticised" for the automatic currency expansion the sterling link produced
ReportedOfficial record. Source: RBIH1; KAUS1966
