Paper Money, as we know it
today, was introduced in India in the late Eighteenth Century.
This was a period of intense political turmoil and uncertainty
in the wake of the collapse of the Mughal Empire and the advent
of the colonial powers. The changed power structure, the upheavals,
wars, and colonial inroads led to the eclipse of indigenous
bankers, as large finance in India moved from their hands
to Agency Houses who enjoyed state patronage. Many agency
houses established banks.
Among the early issuers, the
General Bank of Bengal and Bahar (1773-75) was a state sponsored
institution set up in participation with local expertise.
Its notes enjoyed government patronage. Though successful
and profitable, the bank was officially wound up and was short
lived. The Bank of Hindostan (1770-1832) was set up by the
agency house of Alexander and Company was particularly successful.
It survived three panic runs on it. The Bank of Hindostan
finally went under when its parent firm M/s Alexander and
Co. failed in the commercial crisis of 1832. Official patronage
and the acceptance of notes in the payment of revenue was
a very important factor in determining the circulation of
bank notes. Wide use of bank notes, however, came with the
note issues of the semi-government Presidency Banks, notably
the Bank of Bengal which was established in 1806 as the Bank
of Calcutta with a capital of 50 lakh sicca rupees. These
banks were established by Government Charters and had an intimate
relationship with the Government. The charter granted to these
banks accorded them the privilege of issuing notes for circulation
within their circles.
Notes issued by the Bank of
Bengal can broadly be categorised in 3 broad series viz: the
'Unifaced' Series, the 'Commerce' Series and the 'Britannia'
Series. The early notes of the Bank of Bengal were unifaced
and were issued as one gold mohur (sixteen sicca rupees in
Calcutta) and in denominations deemed convenient in the early
19th Century, viz., Rs. 100, Rs. 250, Rs. 500,
Unifaced Notes of the Bank
The Bank of Bengal notes later
introduced a vignette represented an allegorical female figure
personifying 'Commerce' sitting by the quay. The notes were
printed on both sides. On the obverse the name of the bank
and the denominations were printed in three scripts, viz.,
Urdu, Bengali and Nagri. On the reverse of such notes was
printed a cartouche with ornamentation carrying the name of
the Bank. Around the mid nineteenth century, the motif 'Commerce'
was replaced by 'Britannia'. The note had intricate patterns
and multiple colours to deter forgeries.
The second Presidency Bank
was established in 1840 in Bombay, which had developed as
major commercial centre. The Bank had a checkered history.
The crisis resulting from the end of the speculative cotton
boom led to the liquidation of Bank of Bombay in 1868. It
was however reconstituted in the same year. Notes issued by
the Bank of Bombay carried the vignettes of the Town Hall
and others the statues of Mountstuart Elphinstone and John
Note issued by the Bank
The Bank of Madras established
in 1843 was the third Presidency Bank. It had the smallest
issue of bank notes amongst Presidency Banks. The notes of
the Bank of Madras bore the vignette of Sir Thomas Munroe,
Governor of Madras (1817-1827).
The other private banks which
issued bank notes were the Orient Bank Corporation established
in Bombay as the Bank of Western India in 1842. Its notes
featured the Bombay Town Hall as vignette. The Commercial
Bank of India established in 1845 in Bombay (also an Exchange
Bank) issued exotic notes with an interblend of Western and
Eastern Motifs. The bank failed in the crash of 1866. The
paper currency Act of 1861 divested these banks of the right
to note issue; the Presidency Banks were, however, given the
free use of Government balances and were initially given the
right to manage the note issues of Government of India.