Banking on the page of history

The picture shows coins of the East India Company era. Photo: Source: Commercial History of Dhaka, a DCCI publication

It is believed that the money of Jagat Sheth together with the sword of the English brought about the fall of Nawab (emperor) Siraj-Ud-Daulah in Bengal in 1757.
In history, Jagat Seth's House is known as the kingpin of the Plassey conspiracy. What is little known is its monopoly of the mint, currency business and banking sectors of Bengal, Bihar and Orissa for over 100 years between the 18th and 19th centuries.
The house had served as the East India Company's official banker for years.
Jagat Sheth meaning 'Banker of the World' was a title conferred on Fateh Chand, a rich Marwari merchant in Bengal.
The Jagath Seth House was the most influential bank at a time when there was no formal or regular banking in the subcontinent. They had their merchant and loan offices in Dhaka, Calcutta (now Kolkata) and Murshidabad. These loan offices extended their lending activities to rural areas and gave short, medium and long-term credit at a 40-50 percent rate of interest.
In the 18th century, Subrabankis, Sahas and Basaks came to grab a share of the business and banking activity with the help of other businessmen, who were Hindus.
Modern banking evolved in Bengal during the British period. The Hindustan Bank was established in Calcutta in 1700. But the Bengal Bank, established in 1784, is considered to be the first British-patronised modern bank in India to start trading in credit and money. Also, there were loan offices in major towns in the then East Bengal.
“Although the British rules established and ran the Bank of Bengal with the local revenue, it did not lend to the businesses and the people of the Bengal,” said Dr Chittabrata Palit, professor (emeritus) of history at Jadavpur University in Kolkata.
The historian is in Dhaka to attend a three-day international seminar on 'the history heritage and urban issues of capital Dhaka', as part of celebrating the completion of 400 years of capital Dhaka. Asiatic Society of Bangladesh is organising the event at the Senate Building in Dhaka University.
“Then, Daraknath Tagore came up with Union Bank to help Bengali businesses. But the bank was collapsed in 1840 due to some British companies' no return of loans that they took from the bank,” said Dr Chittabrata, who has 46 publications, some of which have focused on the evolution of the banking history in Bengal.
Md Salah Uddin, assistant professor of Jagannath University, who presented a paper on 'banking in Dhaka since 1757', said Dacca Bank established in 1846 with a paid-up capital of Tk 3 lakh, was the first modern bank headquartered in Dhaka.
“Nawab Abdul Gani was one of the sponsors of the bank,” he said.
During the Sawdeshi movement in the early 1900s, the Bengalis made an entrance in a big way in banking. At that time, cooperative, agriculture and commercial banking also flourished.
The banking sector was reshaped after the separation of India and Pakistan in 1947. Only a few state-owned banks had their activities in East Pakistan (now Bangladesh) with a huge concentration in Dhaka. Some Bengali entrepreneurs established the now Pubali Bank in 1959, to support their fellow businesses with loans.
The banking sector had to start a fresh journey in the war-ravaged Bangladesh after independence in 1971. The government took over all banks under a nationalisation order in 1972.
“The sector got a new and dynamic shape after the government took up the privatisation policy in 1983,” said Salah Uddin. Pubali Bank and Uttara Bank were denationalised and the sector opened up to the private sector. By 1985, a dozen new banks hit the market under private ownership.
Now 48 banks operate in the country, of which, 39 are privately owned, including nine foreign banks.
Dr Robert Gallagher, a UK delegate, was amused to know that all of these banks counted profits in 2009 when big banks in his country collapsed due to the global economic meltdown.
“It is a great success. But the credit should go to the ancestors who struggled to set up a bank in the 18th century,” said Salah Uddin.
sajjad@thedailystar.net