Named for India, Registered in London

In February 1879 the London Gazette printed the shareholders of the National Bank of India, and among them was Jamsetjee Nusserwanjee Tata.¹ Beside him stood Parsi merchants of Bombay, the Armenian Seth Aratoon Apcar and investors on Cornhill and Mincing Lane, yet the bank had been run from London since 1866.

It was founded in Calcutta in 1863 as an Indian-registered company, “promoted by British and Indian businessmen”. In 1866 its head office moved to London, where a British-registered company of the same name acquired the business.² This paper’s claim register rates the statement that it “was an Indian bank” partially supported, and sums it up: “Partly true, then false.”³ Indians owned part of it; they did not control it.

Eighteen exchange banks, eight of them English

In 1931 the Indian Central Banking Enquiry Committee counted 18 exchange banks, the financiers of India’s foreign trade, and wrote: “All of them are non-Indian.” Eight had head offices in England, three in Japan, two in Holland, two in the United States and one each in France, Portugal and Hongkong.⁴ The claim that they were “British-owned and controlled” is therefore rated contradicted for the class, though partially supported for the eight English banks.

Bank	Founded	Headquarters	Ownership, as recorded
Bank of Bengal	1809	Calcutta	Joint-stock; East India Company held 100 of 500 shares at incorporation
Chartered Bank of India, Australia and China	1853	London	Royal Charter; “based in and controlled from the City of London”
National Bank of India	1863	Calcutta, then London from 1866	Indian-registered to 1866, then a British-registered company
Hongkong and Shanghai Banking Corporation	1864	Hong Kong	Hong Kong-registered; its London office a branch
Mercantile Bank of India	1893	London	English joint-stock company with a London board
Eastern Bank	1910	London	Founded by E. D. Sassoon & Co. of Bombay
Imperial Bank of India	1921	Bombay	Private shareholders of the three Presidency Banks

Source: the paper’s bank table, drawing on the London Archives, the 1931 Committee report and Bagchi.⁵

Indian authorities saw little of their business. The 1931 report found no provision obliging them “to furnish to any authority in India any figures relating to their business in India”, and one member of the Committee wrote on 23 October 1930 that after twelve months’ effort the figures were “not being made available by institutions, who have disclosed the strongest objection to any interference with their working in this country”.⁶ The claim that they refused disclosure is rated supported.

The Presidency Banks: private shares, public charters

The Presidency Banks were joint-stock companies whose proprietors elected the directors, but the state began as a shareholder. The East India Company took 20 per cent of the Bank of Bengal in 1809. The Government of Bombay subscribed Rs 3 lakh of the Bank of Bombay’s Rs 52.25 lakh in 1840, about 5.7 per cent, and appointed three of its nine directors.⁷ The Presidency Banks Act of 1876 records the Government of India holding 10 per cent of both Bengal and Madras, and selling those shares to the banks’ directors at premiums of 22.5 and 10 per cent.⁸

The boards were another matter. From 1860 the Bank of Bengal’s seats went to partners of Calcutta agency houses such as Jardine, Skinner & Co. and Gillanders, Arbuthnot & Co., beside ex officio government officers.⁹ No Indian was elected a director of the Bank of Madras until 1920, when H. M. Ibrahim Sait and M. A. Parthasarathy Aiyangar joined; the chairman, A. P. Symonds, said their election owed as much to the politics of the Imperial Bank Bill as to the board’s choice.¹⁰

Ownership did not match the boardrooms. The historian Amiya Kumar Bagchi, analysing India Office shareholder lists, puts the Indian share of the stock in 1913 at 17.7 per cent in Bengal, 21.8 per cent in Madras and 61.6 per cent in Bombay.¹¹ The figures are marked “reported”, since the register itself has not been seen. On them, the claim that the Presidency Banks were “British institutions” is partially supported: British-controlled, yes; British-owned in Bombay, no. The Bank of Bombay was majority Indian-owned before the First World War, and its board was still counted as mostly European. Bagchi writes that from the 1860s “the majority of the board were always Europeans (counting the Sassoons and their relations as Europeans in this context)”.¹²

The Bank of Bombay was majority Indian-owned before the First World War, and its board was still counted as mostly European.

What the records show on the Sassoons and the Rothschilds

The most repeated claim is that a few London banking families, Rothschild and Sassoon usually named first, “owned” Indian banking. The register rates that wording contradicted, and a softer version, “owned or controlled”, partially supported; both rest on sources marked “reported”.¹³

The Sassoon record consists of particular directorships and foundings. E. D. Sassoon was the fourth of seven directors when the Bank of Bombay was reconstituted in 1876; S. M. Moses of David Sassoon & Co. presided at its meeting of August 1902; David Sassoon sponsored and first chaired the Bank of India in 1906; E. D. Sassoon & Co. founded the Eastern Bank in 1910.¹⁴ Bagchi says the Eastern Bank later “passed under British control”, giving no date. No Sassoon shareholding percentage in any bank appears in the sources, and in 1876 two Sassoon firms appear in the Bank of Bombay’s books as customers with Rs 5 lakh credit limits, not as owners.

For the Rothschilds the record is thinner. Alfred de Rothschild appears as author of a rejected currency scheme, not as owner or director of any Indian bank. The claim that “Rothschilds financed the Council Bills” is rated unverifiable: no document reached names the house as a buyer.¹⁵ A Hansard return of November 1912 names the five deposit banks and 61 approved borrowers that handled the Secretary of State’s London balances; no Rothschild, Baring or Sassoon firm appears.¹⁶

Bankers sat on the Council of India

What is documented is an overlap of people. Andrew Cassels, chairman of the Chartered Bank, sat on the Council of India from 1874 to 1884; Bertram Wodehouse Currie of Glyn, Mills, Currie & Co. was its financial member from 1880 to 1895; James Wilson, founder of the Chartered Bank, was the first Finance Member of the Viceroy’s Council in 1859 and 1860.¹⁷ That the India Office and the City “were interlocked through the same individuals” is rated supported. That a recurring surname proves a family network is undetermined: no document shows the Arbuthnots of the Council of India were partners of Gillanders, Arbuthnot & Co.¹⁸

1921: three banks become one

On 27 January 1921 the Banks of Bengal, Bombay and Madras were amalgamated into the Imperial Bank of India under Act XLVII of 1920.¹⁹ It remained owned by the proprietors of the three old banks, but the Government appointed 10 of the 16 members of its Central Board and made it sole banker to Government for ten years in the first instance.²⁰ The ratio at which each bank’s shareholders received new stock is not stated in the sources read, and a figure of 80 per cent private ownership rests on an encyclopaedia entry, marked “reported”.²¹

1935: a central bank with 92,000 shareholders

The Reserve Bank of India opened on 1 April 1935 as a shareholders’ bank. Its Rs 5 crore of capital, in five lakh shares of Rs 100, was allotted to the public except for 2,200 shares assigned to the Central Government for sale at par to directors. The original shareholders numbered 28,000 in Bombay, 23,890 in Calcutta, 23,000 in Delhi, 14,000 in Madras and 3,157 in Rangoon, some 92,000 in all.²² That it was “a private shareholders’ bank, not a state bank, until 1949” is rated supported, though Government nominated much of the Board.

That design had been contested. In 1927 a Joint Committee majority recommended a wholly state-owned bank, and the Government withdrew its Bill on 8 September.²³ The first Governor, Sir Osborne Smith, had been a Managing Governor of the Imperial Bank; the Reserve Bank’s official history quotes C. D. Deshmukh as saying that plans “were made to ensure that the first Governor of the Reserve Bank would be a person on whom the Bank of England could rely”.²⁴

On 1 January 1949 the Central Government bought out the shareholders at Rs 118-10 a share.²⁵ The one source that could say by name who owned the Presidency Banks is the India Office file IOR/L/F/7/219. This paper knows it only through Bagchi’s summary, which counts shareholders by community rather than by family; who held the largest blocks of Bank of Bengal stock in 1913 is still not on the record.

Footnotes

1. The Gazette (London), issue 24685, 26 February 1879, pp. 1615-1620, statutory return of the shareholders of the National Bank of India (thegazette.co.uk/London/issue/24685/page/1619). ↩

2. The London Archives, GB 0074 CLC/B/207/NB01, National Bank of India catalogue, via AIM25 (atom.aim25.com/index.php/national-bank-of-india-corporate). The description “promoted by British and Indian businessmen” is the archive’s own summary and names no individual; it is marked “reported”. ↩

3. Claim register, “The National Bank of India was an Indian bank”: partially supported, strong. Sources: London Archives CLC/B/207/NB01; Indian Central Banking Enquiry Committee 1931, Vol. I Pt I, para. 31; The Gazette (London) 24685 (1879) and 24816 (1880). ↩

4. Indian Central Banking Enquiry Committee, 1931, Vol. I Pt I, paras. 31, 42 and 422 (archive.org/details/in.ernet.dli.2015.36647). Claim register, “The exchange banks were British-owned and controlled”: contradicted, strong. ↩

5. Chartered Bank: The Gazette (London) issue 27888 suppl., 20 February 1906, and London Archives CLC/B/207/CH01. Hongkong and Shanghai: Keynes, Indian Currency and Finance (1913), pp. 206-217, and the 1931 Committee, para. 31. Mercantile Bank: Statistical Tables relating to Banks in India, 1915 to 1926 bound issue. Eastern Bank: Bagchi, Vol. 2, p. 70 n. 31, and Keynes (1913), p. 208 n. 1. Bank of Bengal: G. P. Symes Scutt, The History of the Bank of Bengal (Calcutta, 1904). Imperial Bank: Reserve Bank of India, History of the Reserve Bank of India, Vol. I, ch. 1, pp. 24-26. ↩

6. Indian Central Banking Enquiry Committee, 1931, Vol. I Pt I, para. 423, and Vol. I Pt II, printed correspondence, pp. 445-447. The member who wrote is not named in the register. Claim register: supported, strong. ↩

7. Bank of Bengal: 1809 charter as reprinted in Scutt (1904) (archive.org/details/cu31924022945129). Bank of Bombay: Bagchi, The Evolution of the State Bank of India, Vol. 1; the 5.7 per cent is arithmetic on Bagchi’s figures and the row is marked “reported”. ↩

8. The Presidency Banks Act, 1876 (Act XI of 1876), preamble and s.68, printed in The Unrepealed General Acts of the Governor General in Council from 1867 to 1876 (Calcutta, 1887), pp. 553-584 (archive.org/details/wbsl.19487). The Act records no Government holding in the reconstituted Bank of Bombay. An earlier summary in the claim register gives 10, 10 and 5.7 per cent for the three banks without distinguishing dates; that summary is marked “reported”. ↩

9. Scutt (1904), list of directors since 1860. The record shows board seats only; no shareholding by these firms is stated. ↩

10. Bagchi, The Evolution of the State Bank of India (1997), on the Bank of Madras, including the AGM of 2 August 1920. The absence of Indian directors before 1920 is Bagchi’s statement. ↩

11. Bagchi, Vol. 2, pp. 449-460 and n. 23, analysing IOR/L/F/7/219 (archive.org/details/in.ernet.dli.2015.544307). Confidence: reported; the register was not seen. Bagchi also cites Howard’s estimate of 62.9 per cent Indian shareholding in the Bank of Bombay in 1919. ↩

12. Bagchi, The Evolution of the State Bank of India (1997), on the Bank of Bombay board after its reconstitution in the 1860s. ↩

13. Claim register, P3a (“owned”): contradicted, moderate, confidence reported, sources Bagchi Vol. 2 and Hansard 7 and 19 November 1912. Second entry (“owned or controlled”): partially supported, moderate, confidence reported, sources Bagchi Vol. 2 chs 7-10, Keynes (1913) p. 208 n. 1, London Archives CLC/B/207/ED01. ↩

14. Bagchi, Vol. 2, chs 7 and 8, and p. 70 n. 31; Keynes (1913), p. 208 n. 1, on the Eastern Bank being “established under the auspices of Messrs. E. D. Sassoon”. The Moses and 1876 board entries are marked “reported”. Bagchi also records Arthur Sassoon on the provisional committee that floated the Hongkong and Shanghai Banking Corporation in 1864, citing F. H. H. King’s official history, a secondary source. ↩

15. Claim register, “Rothschilds financed the Council Bills”: unverifiable, weak, confidence unknown; recorded as not found, not as contradicted. On Alfred de Rothschild’s currency scheme: S. V. Doraiswami, Indian Finance, Currency and Banking (1915), and the India Office List 1928, as summarised in the register (confidence reported). ↩

16. Hansard, HC Deb 7 November 1912, vol. 43 cc1461-3W; 5 November 1912, vol. 43 cc1003-6. Claim register, P3b: partially supported, moderate. ↩

17. India Office List, 1928; official register entries for Cassels, Currie and Wilson. Claim register, “The India Office and the City were interlocked through the same individuals”: supported, strong. ↩

18. Claim register, “A family name appearing repeatedly across the India Office and the banks proves a controlling network”: undetermined, weak, confidence reported. Sources: India Office List 1928; Scutt (1904). ↩

19. Statistical Abstract, 1924, Table 137 footnote; H. S. Jevons (1922), pp. 77-79; Reserve Bank of India, History of the Reserve Bank of India, Vol. I, ch. 1. ↩

20. History of the Reserve Bank of India, Vol. I, ch. 1, pp. 25-26. ↩

21. Register entry for the Imperial Bank’s ownership split, citing Wikipedia, “Imperial Bank of India”, and Bagchi (1997); the share clauses of the Imperial Bank of India Act 1920 were not examined line by line. Confidence: reported. The allotment ratio to Presidency Bank shareholders is recorded as unknown. ↩

22. History of the Reserve Bank of India, Vol. I, ch. 4, p. 130, and ch. 3, pp. 84-85. The total of 92,047 is this paper’s sum of the five registers. Claim register, P1c: supported, strong. ↩

23. History of the Reserve Bank of India, Vol. I, pp. 27-33; Indian Central Banking Enquiry Committee, 1931, ch. III, para. 39. ↩

24. History of the Reserve Bank of India, Vol. I, ch. 4, pp. 122-126. ↩

25. History of the Reserve Bank of India, Vol. I, ch. 17, pp. 505 and 527-528; Reserve Bank (Transfer to Public Ownership) Act, 1948. ↩