forex · 1 March 1948
First IMF drawing by India
US$28 mn (US$100 mn by 1949-04-30)
Import surge after decontrol
VerifiedOfficial record. Source: IMF AR 1949
Prime Minister: Jawaharlal Nehru
Partition, planning, aid consortia and nationalised banks.
Bank Rate
3%
unchanged on 1947
Rupee per dollar
₹3.31
unchanged on 1947
Arabian Light
$1.99
+4.7% on 1947
forex · 1 March 1948
US$28 mn (US$100 mn by 1949-04-30)
Import surge after decontrol
VerifiedOfficial record. Source: IMF AR 1949
money / currency · 30 June 1948
State Bank of Pakistan from 1948-07-01
VerifiedOfficial record. Source: RBI chronology 1935–49
Banking · regulation · 1 January 1948
VerifiedOfficial record. Source: RBIH1 ch. 17
Government of India · 1 February 1948
~$25m folded in
The interim agreement extended to 30 June 1948; the remaining balance of the Post-War Dollar Fund was folded into the limit fixed for India's drawings on the central reserves for that half year, so India had no further claim on the Fund after that date
VerifiedOfficial record. Source: RBIH1
Government of India · 15 July 1948
see magnitudes above
Sterling Balances Agreement of July 1948 announced in the House of Commons by Sir Stafford Cripps: £100m for defence stores and fixed assets; £55m due from the UK; £176¼m pension annuity; three-year term to 30 June 1951; no No. 2→No. 1 release in 1948-49; £40m/yr thereafter; £60m No. 1 Account floor; £15m hard-currency drawing limit
VerifiedOfficial record. Source: HAN4807; RCF4950
Reserve Bank of India · Invalid Date
Rs 267.51 crores outstanding at end-1951-52
Ad hoc treasury bills created in the Issue Department to replace sterling securities transferred to the UK Government, in terms of the July 1948 Sterling Balances Agreement, for the purchase of sterling pensions annuities and defence stores and installations taken over
VerifiedOfficial record. Source: RCF5657; RCF5051
Reserve Bank of India · regulation · 1 September 1948
Non-scheduled banks' demand liabilities and cash in hand compiled from returns in Form III under the Banking Companies (Control) Ordinance
VerifiedOfficial record. Source: BMS1954
Reserve Bank of India · 1 January 1948
The Partition Council's sterling-asset arrangements take effect: each Dominion keeps its own foreign-exchange earnings from this date, and the separate Pakistan account is run through the Bank of England
VerifiedOfficial record. Source: PC218; UNTS134-1796; UNTS134-1797
Reserve Bank of India / HM Treasury · regulation · 15 February 1948
The principal Agreement is extended, with effect from 1 January 1948, pending completion of a longer settlement. Raisman to Narahari Rao; the annexed paragraphs of the Partition Council minute are expressly incorporated
VerifiedOfficial record. Source: UNTS134-1796
Banking · regulation · 21 February 1948
10
The principal Agreement, which "by virtue of Article X (a) … constitutes an Agreement between the Government of the United Kingdom and the Government of Pakistan", is extended to 30 June 1948 with effect from 1 January 1948, and applies only to the Dominion of Pakistan. A £10,000,000 working balance is transferred from the No. 2 Account to the Pakistan Account, plus a further £6,000,000
VerifiedOfficial record. Source: UNTS134-1797
Government of Pakistan / HM Treasury · 21 February 1948
A further UK–Pakistan exchange of letters of the same date extends, mutatis mutandis to Pakistan, the three side understandings of 14 August 1947 (Silver Redemption Reserve, rate of interest on sterling balances, Indian private sterling balances)
VerifiedOfficial record. Source: UNTS134-1797
Government of India · 1 June 1948
83
An Indian ministerial delegation led by the Finance Minister, R. K. Shanmukham Chetty, and including the Governor of the Reserve Bank, C. D. Deshmukh, visits Britain seeking a longer (three-year) agreement and to settle the valuation of military stores and the pension annuity. India had meanwhile accumulated current sterling of about £83 million
VerifiedOfficial record. Source: RBIH2-PLENTY
Banking · 1 July 1948
Pakistan assumes complete control over its currency and banking system
VerifiedOfficial record. Source: VAKIL1950; ANKIT2023
Government of India / HM Treasury · 9 July 1948
100
(1) Final settlement of £100 million payable by the Government of India "in respect of all Defence stores and fixed assets … taken over by the Government of undivided India on 1st April, 1947", in full and final settlement for both Dominions. (2) Purchase of a pension annuity for a capital sum of £147,605,125 to be paid by India out of the No. 2 Account, in return for tapering annuities from 1948-49 to 2007-08. (3) The remaining sum due to India and Pakistan under the Indian Defence Expenditure Plan is fixed at £55 million, of which £8,951,250 is payable to Pakistan. A fourth letter of the same date extends the silver-reserve and interest-rate understandings
VerifiedOfficial record. Source: UNTS134-1796
Reserve Bank of India · regulation · 9 July 1948
40
2 to No. 1 Account in the year 1 July 1948 – 30 June 1949; (b) in 1949-50 and 1950-51, releases of such amounts, not exceeding a total of £40 million in each year, as are required to prevent the No. 1 Account balance falling below £60 million, in multiples of £5 million; (c) India agrees so to limit expenditure in hard-currency areas that drawings on the central reserves in the twelve months to 30 June 1949 do not exceed the equivalent of £15 million
VerifiedOfficial record. Source: UNTS134-1796; HAN4807
State Bank of Pakistan / HM Treasury · 14 July 1948
45
The principal Agreement is extended to 30 June 1949; £2 million is added to the Pakistan working balance, increasing it to £12 million; £45 million is transferred from No. 2 to No. 1 Account for 1948-49 plus up to a further £5 million for refugee resettlement and rehabilitation; Pakistan's net hard-currency drawings for 1948-49 are limited to £5 million; the UK undertakes a further £5 million in 1949-50 and £5 million in 1950-51. A separate letter records the £100 million defence-stores settlement for Pakistan, and a further letter records a Pakistan pension annuity for a capital sum of £8,166,848 (1948-49 to 1997-98)
VerifiedOfficial record. Source: UNTS134-1797
Government of the United Kingdom · 15 July 1948
100
Cripps makes the Commons statement on the Indian settlement: £100m for defence stores and fixed assets "found from the joint sterling balances of India and Pakistan"; £55m due to India and Pakistan under the Indian Defence Expenditure Plan, "made from Army Votes"; £176¼ million paid by the Indian and Pakistan Governments out of their sterling balances for a pension annuity yielding tapering annuities over 50–60 years, starting at roughly £5,500,000 in the first year; the three-year arrangement from 1 July 1948; the £15m hard-currency ceiling; and a maximum of £80 million of unrequited exports over the three years. Cripps promises a separate statement on Pakistan "next week"
VerifiedOfficial record. Source: HAN4807
Banking · regulation · 1 January 1948
IOR/L/E/8/8654 is the Economic Department file "F&E E(B) 13532/48, Proposed nationalisation of the Reserve Bank of India and of the Imperial Bank". This verifies the reference earlier passes carried forward unverified
VerifiedOfficial record. Source: IOR/L/E/8/8654 () (searcharchives.bl.uk)
Nath Bank · 1 September 1948
Rs 72.50 lakh
The RBI's Deputy Governor sanctioned limits to the Nath Bank aggregating Rs 72.50 lakh against its over-all assets after panic appeals from Bengali banks and the West Bengal Government.
VerifiedOfficial record. Source: RBI, History of the Reserve Bank of India, Vol. I, pp. 732–733
Westminster Bank Ltd, London · 7 April 1948
GBP 2000000
A "Second Account" in the name of the Nizam's Government was opened and £1,000,000 transferred to it; on 24 May 1948 the remaining £1,000,000 was transferred across, closing the Hyderabad State Bank Account
VerifiedOfficial record. Source: [2019] EWHC 2551 (Ch), paras 96–103
Banking · 24 June 1948
The RBI decided, with Government's concurrence, to abolish its currency chests at Hyderabad and Secunderabad and to suspend remittance facilities between India and Hyderabad, holding that it was under no obligation under the RBI Act or its agreement with the Imperial Bank to maintain chests outside British India
VerifiedOfficial record. Source: RBIH1 pp. 582; MENON1956, Hyderabad ch.
Banking · 1 September 1948
Following the "successful conclusion" of the police action, the currency chests were re-established and remittance facilities between India and Hyderabad resumed; restrictions on the use of Indian currency in Hyderabad were removed
VerifiedOfficial record. Source: RBIH1 p. 582
Government of India · 1 July 1948
£65m
2 Account" with the Bank of England, with a "No. 1 Account" for current use; £65m transferred from No. 2 to No. 1 at once for India and Pakistan
ReportedPress. Source: MELL1951
Government of India · 2 January 1948
75
Nehru tells a press conference on 2 January 1948: "… we cannot make these payments at present when the money we give might be utilized for warlike preparations against India." Liaquat Ali Khan replies the next day. Patel states on 12 January 1948: "It is the Pakistan representatives who were all the time trying to soft-pedal the Kashmir issue in order to secure concessions from us on the financial issues … We were, therefore, fully justified in providing against Pakistan's possible continuance of aggressive actions in regard to Kashmir by postponing the implementation of the agreement"
ReportedPeer-reviewed. Source: BRECHER1953
Various (Baroda) · scandal · 1 January 1948
A senior Indian Audit and Accounts Service officer was appointed by the Government of India to scrutinise the Maharaja of Baroda's past financial transactions and to inventory the state jewels; his report, accepted on the ruler's behalf with one or two modifications, found "an alarming state of affairs" and that failure to produce accounts had been "a very great handicap"
ReportedOfficial record. Source: MENON1956, Baroda ch.
banking
Non-scheduled banks' returns in Form III from September 1948; the immediate post-war regulatory step before the comprehensive Banking Companies Act
VerifiedOfficial record. Source: BMS1954
external payments
Three-year extension to 30 June 1951; £100m stores payment; £176¼m annuity; no No. 2→No. 1 release in 1948-49; £40m/yr thereafter against a £60m No. 1 Account floor; £15m hard-currency drawing ceiling
VerifiedOfficial record. Source: HAN4807
India–UK financial relations
Three-year settlement: stores £100m; pensions capitalised at £47.5m + £20.5m; £80m releases over 1949–51; £5m convertibility; £15m hard-currency ceiling; £55m Defence Expenditure Plan arrear
VerifiedOfficial record. Source: HC Deb 15 Jul 1948 vol 453 cc1404–10; eparlib.nic.in.57701 ch. II.2.23–2.25
RBI ownership
Compulsory acquisition of the RBI's private shares; state ownership from 1 January 1949
VerifiedOfficial record. Source: RBIH1 pp. 505, 528
India's sterling reserves
No No.2 to No.1 release 1948-49, up to GBP 40m a year thereafter, hard-currency drawings capped at GBP 15m; balances debited GBP 100m for stores and GBP 176.25m for the pension annuity; final settlement expressly postponed
VerifiedOfficial record. Source: Hansard, HC Deb 15 Jul 1948 vol 453 cc1404-10
Hyderabad State
Government Securities held by or on behalf of the Nizam, the Government of Hyderabad and the Hyderabad State Bank were made non-transferable without the Central Government's approval; the Government of India's currency chests in Hyderabad were withdrawn; and the export to Hyderabad of gold, silver, jewellery and Indian currency was prohibited, because the Hyderabad Government was using all its available resources to buy arms and ammunition abroad
VerifiedOfficial record. Source: MENON1956, Hyderabad ch.
imports
Freely issued OGLs in 1946 and early 1947 admitted "a large number of luxury and semi-luxury goods, like fountain pens, wrist watches, cameras, playing cards"; the policy was reversed in 1947 and OGL XI was cancelled in May 1949, with India having to fund outstanding commitments
ReportedPress. Source: MELL1951; RCF4950
convertibility of sterling balances
After January 1948 the UK ceased to finance India's dollar deficit from the central reserves of the sterling area, and India's convertibility was limited to £10m ($40m) for the half year January–June 1948 and £15m ($60m) for the year July 1948–June 1949
ReportedPress. Source: MELL1951
prices
Internal decontrol of foodgrains and sugar ordered in December 1947 and gradual relaxation of cloth price and distribution controls from mid-January 1948; after July 1948 cloth and foodgrains were recontrolled and import policy liberalised to break the price rise
ReportedPress. Source: MELL1951
Banking companies
Listed in RBIH1's table of contents
UnconfirmedOfficial record. Source: RBIH1 (contents)
Industrial Policy Resolution, 1948-04-06
New units in coal, steel, aircraft, shipbuilding and telecoms equipment reserved to the state, with existing private units left alone for ten years.
ReportedOfficial record. Source: Government of India resolution
Sterling balances agreement (1948-07-09): import liberalisation clause
In return for releases, India agreed to liberalise imports of consumer goods (from sterling sources) and to cap dollar drawings at £15 mn. A London-shaped trade term.
ReportedPeer-reviewed. Source: Abreu TD 643; Hansard 1948-07-15
Havana Conference (1947-11-21 ~ 1948-03-24): ITO Charter
It rejected the Geneva draft's rule that quantitative restrictions for development needed prior ITO approval, and won language letting developing countries impose protective QRs largely on their own authority (Charter Art. 13–14). India signed the Final Act (1948-03-24). The ITO died when the US Congress failed to ratify it (withdrawn 1950-12).
ReportedPeer-reviewed. Source: WTO, Havana Final Act text; Toye, "Developing multilateralism: the Havana Charter…" (2003); FRUS 1948 vol I pt 2 doc 164
South Asia
Integration of the Nizam's state and its currency (Hyderabad rupee; the Osmania Sicca was phased out by 1959).
ReportedPeer-reviewed. Source: general histories
defence procurement (London)
Case closed by the government in Sept 1955. A London-sourced scandal. I took the amount from secondary accounts, and it was not verified against the PAC report.
UnconfirmedPress. Source: secondary histories (Wikipedia "Jeep scandal case"); PAC reports (primary, not seen)
| Creditor | Instrument | Amount | US$ m | Status | Grade |
|---|---|---|---|---|---|
| IMF | GRA purchase (FY to 1949-04-30); cumulative to Apr 1949 USD 99.98 mn | 71.98 USD | 71.98 | repaid | verified |
| India as creditor; HM Treasury | Raisman–Rao exchange of letters, 1948-02-15/16: extension to 1948-06-30 | 18 GBP | 72.5 | Superseded July 1948 | reported |
| India as creditor; HM Treasury | Chetty–Cripps agreement, 1948-07-09 (London): three years from 1948-07-01 | 80 GBP | 322 | Superseded Aug 1949 | verified |
| HM Government (seller); India pays from balances | Purchase of UK defence stores and fixed installations in India (part of 1948-07-09 settlement) | 100 GBP | 403 | Settled | verified |
| HM Government (annuity seller); India pays from balances | Purchase of pension annuities (sterling pensions of the Government of India and provinces) | 168 GBP | 677 | Settled 1948; annuity payments run to about the 2000s | verified |
| International Monetary Fund | Purchases (drawings) of US dollars against rupees, FY to 1948-04-30 (March 1948) | 28 USD | 28 | Repurchased 1953-54 to 1956-57 (see next row) | verified |
| International Monetary Fund | Purchases FY 1948-05-01 ~ 1949-04-30 (Rs 238,147,229 sold to the Fund) | 71.98 USD | 71.98 | Fully repurchased by 1956-57 | verified |
Rows are listed as recorded. Some describe the same loan from different sources and must not be added together.