This the important as it is described the nature and structure of banking system in India during Mughal period. Mughal have done wonderful job not only in the field of uniting the India , but they introduced the proper banking system on which our current system in based.
2. Objective
• To know about the nature of the trade and
banking system
• To know the features of the banking system
• To know about the different trade route
3. Background
• In 18th century India was one of the biggest centres of
attraction for trade and commerce all over the World.
• There were great flourishing
• trade centres
• in Lahore,
• Agra,
• Ahmadabad,
• Sironj,
• Berhampore,
• Dhaka, Patna,
• Benares, Golconda, Deccan, Bijapur, and Daulatabad.
4. Cont.
• Depending on the nature of trade
• we can classify these trade centres into two
broad categories.
• Towns like Peshawar, Lahore, Sirhind,
Allahabad, Patna and Qassimbazar
(Kassimbazar) prospered because of their
close proximity to the national highways or
trade-routes.
5. Cont.
• Secondly towns like Surat, Cambay, Satgaon,
Chittagong, flourished because of their
location near the sea.
• Apart from these towns there were
manufacturing centres, each famous for its
produce, Dhaka for textile, Patna for saltpetre,
Biana and Sarkhel for indigo and so on.
6. Trading Commodities
• Bengal silk was a very attractive commodity
for the Dutch and English traders.
• From Central Asia came horses, fruits, slaves,
and gorgeous carpets, lavish dress.
7. Banking system
• hundi network was widespread all throughout the
Empire and it could be customized according to need
• For example a trader having paid a fixed sum of money
to a banker in Surat brings the hundi to Ahmedabad,
the banker in the latter place is liable to paid the entire
amount.
• If the trader wishes to pay his creditors he can hand
over the hundi to him and relinquish his obligations.
• The man through him all these transactions occurred
were called shroffs, they engaged in all sorts of money
transfers and issued letter of exchange.
8. Cont.
• The Dutch East India Company mentions that
the commission on hundis in Surat or
Ahmedabad to be .62 to 1.25 percent during
the 1640’s.
• However it was not a fixed rate, in case of
turmoil, political or natural disorder
the hundi rates varied considerably
9. Type of Hundi
• In fact we can classify four types of hundis, and all four
types were issues by shroffs, they were,
• darshani or payable on sight,
• miti or payable after date mentioned in the instrument,
• shah-jog payable to a respectable man, and
• jokhami, sort of risky hundi which covered some elements
of insurance.
• The Jokhami hundis were drawn against goods dispatched
and it contained certain conditions, if the goods are lost or
damaged the holder of the hundi had to bear the loss.
Payment of such hundis is made on safe receipt of goods
and their purchaser act as a sort of insurance agent
10. Features of Banking
• One of the most important tasks of
these shroffs was to understand the value of
the money.
• all coins struck in the name of the provincial
ruler or governor were called sicca.
• shroffs could create an artificial scarcity of
coins, and dictate the amount of commission
at will.
11. Cont.
• In 18th century Ahmedabad a sudden rise of
commission by the shroffs forced the
merchants to take up arms against them.
• the shroffs had full autonomy in deciding the
exchange rates.
• the entire money exchange process was
complex, and it was designed by
the shroffs for their own advantage.
12. Cont.
• The village level shroffs dealt with labourers,
middlemen, various vendors
• ADVANCES:
• very important feature of a banking sector-
Advances or Credit.
• Agricultural loans were mainly availed by the
peasants, mainly from the village money
lenders with high interest rates
13. Cont.
• Agricultural loans were mainly availed by the
peasants, mainly from the village money
lenders with high interest rates
• Sometimes the state offered the peasants
interest free loans, in other times the farmers
had to depend mainly on the rural credit
suppliers.
14. Cont.
• Interest rate of unsecured agricultural loans
was pretty high as high as 40% and most of
the loans to the farmers were unsecured.
• High value advances were offered in the form
of commercial credits to big merchants and
traders.
• During the mid seventeenth century the credit
interest was usually up to 0.5 to 1.25 percent
per month.
15. Cont.
• To finance distant trade the interest rate
sprang up to 40 percent, because of the
higher risk involved.
• both the high net worth bankers and
merchants enjoyed a special privilege in the
Mughal court exa-The Surat merchant Rustam
Manak
16. Cont.
• the Best Banker’s Award in that time as well
such similar practices existed.
• The bankers not only financed the local
merchants and Princes, in fact their most
valued customers were the foreign traders.
• The English, Dutch, French all needed short
term loans to meet their financial
requirements
17. Cont.
• In 1720/21 the Company’s debt in Bengal
alone was Rs. 2.4 million and in 1747/48 it
went up to Rs. 5.5 million.
18. Conclusion
• the big banks in Mughal Empire was not only a
centre of wealth, but also the epicenter of
power.
• The bankers had established a big control
over the highest authority; by their
extraordinary power of ‘purchase’ they could
‘buy’ a throne for their preferred candidate.
