BANKING, TRADE AND COMMERCE

INTRODUCTION

THE CITY OF BOMBAY HAS A LONG HISTORY AS a centre of banking and trade. Now, Bombay is considered as the largest trading and distributing centre in the country and is the abode of almost all the financial institutions with either their head-offices or branch-offices in Bombay. An attempt is therefore made in the present chapter to depict the development of Bombay from a small island to its present position as one of the largest financial and trading centres.

The present chapter for the sake of convenience is divided into two sections viz., (1) Banking and Finance, and (2) Trade and Commerce.

In the first section are described the various financial institutions that cater to the requirements of the economy. They include such agencies as money-lenders, joint-stock banks, co-operative societies, the Life Insu­rance Corporation, joint-stock companies, small savings movement, State-aid to industries and other State sponsored financial institutions.

Of these, the money-lenders and the indigenous bankers are the traditional institutions which played an important role in the credit supply mostly to the people of urban areas. The establishment of banks and their development on modern lines is a later phenomenon. The earliest bank in Bombay was established as early as in 1720. The development of financial organisations and institutions in Bombay began during the 19th Century. Until the establishment of the Bank of Bombay in 1840, the banking business in Bombay was carried on by about hundred Hindu shroffs who were the traditional indigenous bankers. But the excessive rates of interest charged by them and the malpractices adopted to exact money from the poor proved detrimental to the economic well-being of the people in the past. In order to check the prevailing malpractices, the then Government of Bombay State passed the Bombay Money­lenders Act of 1946. Another important event that eventually undermined the influence of money-lenders was the gradual rise of the modern joint-stock banks.After the World War II, and especially after Independence, the banks have considerably expanded their scope of activity by way of liberal policy of credit and also by their policy of branch expansion.

Development in the field of banking was accompanied by a still greater development in the field of co-operation. A large network of co-operative societies is spread all over the city and includes industrial and service co-operatives, housing societies, etc.

These financial institutions, in addition to purveying credit to all classes of people in Bombay, also collect the savings of the people in the form of premia and invest them in the interest yielding securities. The insurance and joint-stock companies need in this context a specific mention. The post-war period experienced a remarkable progress in the case of both these categories. Besides, in 1945, the small savings movement was started with the intention of mopping up purchasing power to fight the inflationary forces set in motion by the war, and later it was adopted by the Planning Commission as an important means to finance the development schemes included in the Five-Year Plans.

The role of Government in the field of finance and other fields of econo­mic activities is also discussed in this chapter. Thus, the first section describes in detail the banking and financial institutions in the district in their historical and structural aspects.

In the second section of the chapter are discussed the structure, direction as also the quantum and value of trade and commerce in the district. In fact, the banking set-up in Bombay has significant bearings on the pattern and organisation of trade and commercial activities. The growth of banking and various financial institutions and increasing facilities of transport and communications have contributed immensely to the growth of trade in Bombay. The State Trading Corporation, State Marketing Federation, Export Promotion Councils, and many other agencies also help the trading activities in Bombay. As such the second section describes all types of trading activities such as forward trading, wholesale and retail trading, regulated and co-operative marketing, as also inland and foreign trade undertaken in Greater Bombay. Besides, it also includes narration of trade-routes which are responsible for growth of trading activities.

Top

SECTION I -BANKING AND FINANCE

GOVERNMENT MINT

After the transfer of Bombay Island to the East India Company, several schemes including a plan for establishment of English currency were considered. In 1670-71 the Court of Directors recommended establishment of a mint at Bombay for coining gold, silver and copper coins. In 1675, President Aungier also put forward his suggestion for the establishment of a mint. On 15th October 1676, the King by Letters of Patent empowered the Company to establish a mint at Bombay and permitted them to coin moneys of gold, silver, copper, tin, lead or any metal. Accordingly, the grant of privilege was intimated by the Company in 1677 and a Rupee was struck at Bombay bearing the Royal Arms and the legend, " By authority of Charles the Second ".

During the first half of the 18th century a considerable quantity of silver rupees of varying coinage and alloy and of a value inferior to the standard of the Bombay and Surat rupees used to be brought to Bombay from outside. Persons were appointed at the Land Pay Office to exchange rupees for pice at the rate of 80 pice for a rupee. Due to scarcity of copper, the local authorities coined tutenag pice to the value of Rs. 2,000. This coin was however, discontinued in 1773. For the want of small currency, half and quarter pice to the value of Rs. 10,000 were coined. Great scarcity of silver which prevailed on the Bombay Island in the middle of eighteenth century led to the establishment of gold currency in 1765. The resolution passed in 1767 equalised the standard of Surat rupees with that of Bombay rupee. In 1774, the rupees coined at Broach were again admitted as current in Bombay.

In 1775 owing to the want of silver currency gold was coined to the amount of Rs. 60,000 in pieces of the value of one silver rupee each, to be in fineness exactly equal to the gold rupees then in circulation and of 1/15th part of the weight of a gold rupee. However, in 1778 the issue of gold coin was stopped.

The old Bombay rupee was identical with that coined at Surat under the Mughal Government. It weighed 178.314 grains and contained 1.24 per cent of alloy. Asthe Nawab of Surat did not observe the agreement with the Bombay Government, all the Bombay rupees were carried to Surat to be re-coined, and the Bombay mint ceased to coin silver for more than 20 years. In 1800, however Government ordered the Surat rupee to be struck in Bombay and from that date the rupee was maintained at an equal value in both the mints. It weighed 179 grains and contained 7.97 per cent, of alloy.

According to the order of 1800, in the Bombay coins 15 grains of silver represented one of gold. A scarcity of rupees in 1801 was responsible for the introduction of new gold coin as a circulating medium. In 1815, the Government ordered abolition of Surat Mint and decided that whole coinage of the Presidency should be conducted at the Bombay Mint. In 1827, the copper pie was introduced which weighed 33 1/3 grains and was equal to one-twelfth of an anna.

The coinage of India was made uniform in 1835. The East India Company's rupee was ordered to take the place of the Sicca rupee. However there was a difference between Sicca rupee and the Company's rupee as the former contained 8 per cent more silver than the latter. In 1841, a two anna silver piece was introduced and a proclamation was issued regulating the gold coinage. According to this proclamation the gold coins were to bear on the obverse the head of Queen Victoria and on the reverse-a lion and a palm tree with the designation " East India Company ". In 1844, a change was made in the device on copper coinage issued from Bombay mint.

In 1857, the sub-divisions used in the public and other accounts were rupees, annas and pies. One gold mohur was equal to 15 silver rupees; one rupee equal to 16 copper annas; one anna equal to 4 pice; and 1 pice equal to 3 pies. However, many mercantile houses and traders retained the old sub-divisions of rupees, quarters and reas. Although the gold mohur and copper anna formed sub-divisions in the scheme of the British Indian currency, those coins were not current.

Upto the year 1893, the operations of the Indian Mints were regulated by the Coinage Acts, viz., Act XVII of 1835, Act XIII of 1862, and Act XXIII of 1870. These Acts provided for the free coinage of gold and silver for the public and for the coinage of copper for Government regiments. There was no great demand for a gold coinage. But public took full advantage of the free coinage of silver. Under the terms of the Coinage Acts in force upto 1893, any person tendering silver to the mint to the amount of 1,000 tolas and over was entitled to have it coined into rupees on payment of a seignorage charge of Rs. 21 for every 1,000 rupees of outturn produced by his tender.

In June 1893 the Indian Mints were closed to the free coinage of gold and silver and since that date no rupees were coined except on Government account.

In 1895 an agreement was effected between the Government of India and two of the local Exchange Banks for the coinage of a British dollar at the Bombay Mint for circulation in the Straits Settlements and Hongkong. The agreement ceased in 1903 when the Government of the former colony issued a new coin called The Straits Settlements Dollar for circulation in their territories. The coinage of the rupee with the effigy of King Edward VII was commenced in January 1903.

Experiments were undertaken in 1905-6 (Bombay Mint, 150th Anniversary Celebration, 1st May 1982, published by Bombay " Mint.)for the manufacture of Cupro-nickel one anna piece with a view to obtaining a coin distinctive in shape from any existing coins current in British India. The minting of this coin began in 1906-07 and the first issues to the public were made from 1st August 1907.

After George V came to the throne in 1910, coins were issued in bis name. There was a tiny elephant on the design of the mail of his effigy on one rupee coin. The Government had to stop minting of these coins as there was wide-spread resentment among the members of one community in India, as this elephant looked like a pig.

Indian coins were issued in the name of George VI when he was crowned in May 1937.

The coins of quaternary silver alloy were introduced from 1940 in place of standard silver. Due to inadequate supplies of silver and the high prices of this metal prevailing in India, it was decided in 1946-47 to dis­continue minting rupees, half-rupees and quarter-rupees, in quaternary silver alloy coins as they contained silver, and instead coins in pure nickel were introduced. These coins came into circulation in 1947.

After January 26, 1950 the effigy of the English monarch on the obverse was replaced by the Ashoka Pillar. From 1950-57 different figures appeared on the reverse of the coins. On one rupee, half-rupee and quarter-rupee coins there were ears of corn ; on two annas, one anna and half an anna coins there was a bull; and on one paisa there was a flying horse.

India adopted the decimal system of coinage from April 1, 1957. The lowest denomination in decimal coinage system as adopted in India is one paisa, and one hundred paise makes one rupee. Initially this paisa was called Naya Paisa to distinguish it from the old paisa. The prefix " Naya " was dropped from 1963. All the coins of decimal series bear the Ashoka Pillar on the obverse side with letters ' Bharat' in Devanagri and ' India' in English on its two sides. On the reverse side these coins bear the denomination in numericals in English, and in letters in Hindi, and also the year of the issue in English numericals. The only exception was that of aluminium-bronze 20 paise coin issued from 1968 to 1971 as this coin contained a figure of a lotus flower on its reverse. It had been decided to issue coins bearing, on the reverse, our national bird, national animal, national fruit, national flower, etc. Accordingly, the first issue was made of national flower. But later, this proposal was dropped and therefore, the 20 paise coin with the lotus on the reverse remained an exception.

With the sudden increase in the prices of copper and nickel, certain changes in the alloy composition of the decimal series were introduced in 1962. They were as under (Indian Coinage Since Independence, issued on the occasion of the 25th Anniversary of Independence, Govt, of India.):—

(1) The bronze one paisa was replaced by nickel brass (copper 79 per cent, zinc 20 per cent, nickel 1 per cent) in 1962. The weight and shape of the coin remained unaltered. In October 1965, the aluminium-magnesium alloy (Mg-3.5 to 4 per cent, Al. remainder) was adopted for the paisa, and the shape was changed from round to square with rounded corners, this new coin weighed 0.75 grams. (2) A new coin in aluminium-magnesium alloy of the denomination of three paise, weighing 1.25 grams and hexagonal in shape was introduced in July 1964. (3) Two paise coin in aluminium-magnesium alloy, weighing 1.0 gram and 8 scalloped was introduced in July 1965. Five paise coin in aluminium-magnesium alloy, weighing 1.5 grams and square with rounded corners was introduced in January 1967. (4) A new coin in the denomination of twenty paise was introduced in April 1968, discontinuing minting of twenty-five paise coin in pure nickel with a view to conserve nickel which was in short supply. The alloy chosen for this new twenty paise coin was aluminium-bronze (copper 92 per cent, nickel 2 per cent and aluminium 6 per cent). The coin was circular in shape and weighed 4.5 grams. (5) The same alloy was used for ten paise coin from the same date with a view to conserve nickel. The aluminium-bronze ten paise coin weighed 4.25 grams, instead of 5.0 grams of the earlier cupro-nickel piece of the same denomination, the shape and design remaining the same in all respects. The aluminium-bronze alloy proved very popular because of its golden yellow colour but this also led to the erroneous belief that this coin contained ' gold ' resulting in large-scale hoarding and diversion of these coins for the making of trinkets, etc. The minting of ten paise and twenty paise coins in aluminium-bronze alloy was therefore, stopped from October 1971. (6) In lieu of the Al. Bronze ten paise coin a new aluminium-magnesium coin was introduced in October 1971 in an entirely new shape and size. It weighs 2.3 grams, has 12 scallops and measures 26 mm. across scallops. (7) In place of aluminium-bronze twenty paise coin, the minting of twenty-five paise coin was resumed from January 1972, but instead of pure nickel, cupro-nickel alloy (75 per cent copper and 25 per cent nickel) has been adopted. The shape and weight as also the general appearance remained the same as of the pure nickel piece except for a small change in the design on the reverse. The cupro-nickel twenty-five paise coin weighs 2.5 grams and is circular in shape (19 mm dia). (8) Cupro-nickel alloy in place of pure nickel has also been adopted for the fifty paise coin from January 1972 with a view to reducing the nickel content. But the shape, weight and general appearance remained unchanged, except for security edging which has been adopted (instead of milled edge of the nickel piece) to deter counterfeiting and for a small change in the design of the reverse. (9) A small change in the design of the reverse of 3 and 5 paise coins was made in March 1972 so as to bring; uniformity inthe design of the reverse of all the denominations.

Apart from the various series of new coins, the mint issues commemorative coins almost every year. Commemorative coin is a coin issued to mark, honour, or observe an event, place or person, or to preserve its memory. The themes on commemorative coins are selected every year by the Government of India on National and International events.

The list of commemorative coins issued by Bombay Mint since Independence is given below:—

Year Theme Denominations
1964 Jawaharlal Nehru Re.1 and 50.P
1969 Mahatma Gandhi Rs.10,Re.1.50.P. and 20 P.
1970 Food for all Rs.10 and 20P.
1971 Food for all Rs.10 and 20 P.
1972 Indian Independance 25 th Anniversary Rs.10 abd 50P.
1973 Grow More Food Rs.20,Rs.10 and 50 P.
1974 Planned families, Food for all Rs.50, Rs.10 and 10 P
1975 Equality, Developement, Peace Rs.50,Rs.10 and 10P
1976 Food and work for all Rs.50,Rs.10 and 10 P.
1977 Save for Development Rs.50,Rs.10,10P and 5 P
1978 Food and Shelter for all Rs.50,Rs.10,10P and 5 P
1979 Happy Child Nation's Pride Rs.50,Rs.10,10P and 5 P
1980 Rural Women's Advancement Rs.100,Rs.10, 25P. and 10 P
1981 World Food Day Rs.100,Rs.10,25 P. and 10 P

Besides, proof coins or uncirculated coins are minted at Bombay. Proof coins (or Collector's coins as they are popularly called) are exceedingly high quality coins. They are struck individually with specially prepared blanks and highly polished dies. A 'Proof set' of Indian coins consists of one coin of each denomination authorised for circulation or commemorative purposes. Orders for the proof coins are booked every year by the Master of the Mint, Bombay upto a specified date notified every year in the leading newspapers.

The current capacity (Nineteenth and Twentieth Century Coins of India, D. C. Chakravarty, 1979.)of the India Government Mint, Bombay, is 3.0 Million pieces a day, on double shift basis. It is the only licensed gold refinery in the country at present. Besides, it manufactures and supplies the reference, secondary and working standards of metric weights, capacity and linear measures for all the States in India. There is also a medal section which undertakes production of medals for civilian and military awards. Orders for supply of Proof' and ' uncirculated ' coins are now executed by Bombay Mint.

In the year 1970 the Bombay Mint coined coins for Greece. In the same year the mint produced 86 million coin blanks for Thailand. This mint supplied coins between the period 1891 and 1947, to many foreign countries, such as Sri Lanka, East Africa, Australia, Egypt, Bhutan, Iraq, Saudi Arabia, Malaya and Muscat.

Top

MONEY-LENDERS

The institution of money-lenders is a traditional organisation and sometimes an hereditary occupation which is generally undertaken by Marwadis, Pathans, landlords, traders, etc. Prior to the introduction of banking system on modern lines by the British rulers in the 19th Century, the money-lenders and the indigenous bankers used to perform all the banking activities. The former used to advance loans mostly for unproductive purposes at a very high rate of interest and did not accept deposits while the latter advanced loans for commercial and industrial purposes and accepted deposits. The fast growth of commercialisation and industrialisation leading to higher standard of living has resulted in the increasing demand for financial assistance and has finally led to the flourishing of institutions engaged in money transactions including the institution of money-lenders. The money-lenders generally work on individual basis with their own financial resources.

In Bombay, the establishment of cotton mills attracted large number of uneducated workers from various parts of the country. It became very difficult for them to adjust with the new conditions of life in the city as also to maintain their families at their native places. They ultimately became regular victims of money-lenders. Before the growth of banking and such other credit facilities, money-lender was the only source for the reasonable rate of interest, the borrowers were continually exploited by the money-lenders. Chronic indebtedness became more or less their way of life. In due course, credit facilities at reasonable rates were made available. The money-lenders, however, continued to enjoy almost the same predominant position in the economy as in the past. In these circumstances, it was found necessary to regulate the business of money-lenders by a legislative act. It was with this purpose in view that the Bombay Money-Lenders Act was passed in 1946.

Generally, theie are two types of money-lenders, professional and casual. The latter advance loans to their friends and try to cover the risk by charging a high rate of interest. The dealings of a casual money­lender are of a casual character and in some cases they even fail to get the repayment of loan. The other type is of professional money-lenders, who undertake money-lending as an occupation or means of their livelihood. There are still others who combine this occupation with some other profession or trading activity. There are Marwadis who are full-time money-lenders and who also supply consumer goods to the borrowers. The Marawadi money-lenders also adopt various techniques for keeping their hold on customers. They generally advance loans on pledge of physical security such as ornaments, moveable or immoveable property etc. The rate of interest varies according to nature of security offered and is calculated on monthly basis. Generally the customers of Marwadis comprise low income group or even middle class people such as mill workers, government servants, petty traders, etc.

Rapid industrialisation and growth of trade and commerce in Bombay provided a good scope to money-lenders. As a money-lender used to offer loans on security immediately without any hesitation, many traders came forward to borrow money from him to meet their business requirements. All these factors have led to increase in the number of money­lenders. During 1963-64, there were 1202 money-lenders in Bombay; while the number increased to 2053 in 1970-71. As compared to Bombay Division, Bombay claimed the highest number of money-lenders; as out of the total of 3228 money-lenders during 1970-71, there were as many as 2053 money-lenders in Bombay. The number of money-lenders in Bombay rose to 2600 during 1973-74 against 3633 in Bombay Division. However, in 1980-81 the number of money-lenders in Greater Bombay showed a decrease as the same stood at 2117.

The transactions of money-lenders are now governed by the Bombay Money-Lenders Act, 1946 which was amended by the Bombay Money-Lenders (Unification and Amendment) Act, 1959. The amount of loans advanced by money-lenders during 1950-51 and 1960-61 in Bombay is shown in the following statement :—

(Figures in Rs.)

Particulars
1950-51
1960-61

Total loans advanced to traders and non-traders—

   
(i)   Exempted under Section 22 of the Act 144,982,527 122,288,806
(ii) Not exempted under Section 22 of the Act 14,372,104 19,248,066
     
Loans advanced to traders-    
(i)Exempted under Section 22 of the Act 143,496,497 121,531,111
(ii) Not exempted under Section 22 of the Act 3,522,834 13,158,710
     
Loans advanced to non-traders-    
(i) Exempted under Section 22 of the Act 1,486,030 757,695
(ii) Not exempted under Section 22 of the Act 10,849,270 6,089,356

A comparative position of money-lending business in Greater Bombay and the State during 1970-71, 1973-74 and 1976-77 was as follows:—

(a) Money-lending transactions exempted under Section 22 of the Bombay Money-Lenders Act—

 

Loans to traders

Loans to non-traders

Tota Loans

Year

(Rs.)

(Rs.)

(Rs.)

 

 

 

 

Greater Bombay—

 

 

 

1970-71

306,733,000

31,235,000

337,968,000

1973-74

264,938,113

49,662,291

314,600,404

1976-77

209,417,000

37,292,000

246,709,000

Maharashtra—

 

 

 

1970-71

307,952,000

41,466,000

349,418,000

1973-74

266,371,513

65,506,068

331,877,581

1976-77

209,417,000

41,251,000

250,668,000

(b) Money lending transactions not exempted under Section 22 of the Bombay Money-Lenders Act—

 

Loans to traders

Loans to non-traders

Tota Loans

Year

(Rs.)

(Rs.)

(Rs.)

 

 

 

 

Greater Bombay—

 

 

 

1970-71

63,180,000

62,578,000

125,758,000

1973-74

105,512,565

84,403,512

189,916,077

1976-77

61,144,000

30,999,000

92,143,000

Maharashtra—

 

 

 

1970-71

117,068,000

239,721,000

356,789,000

1973-74

163,804,450

336,437,819

500,242,269

1976-77

91,105,000

153,883,000

244,988,000


The licensed money-lenders in Greater Bombay who were not exempted under Section 22 of the Bombay Money-Lenders Act, 1946 advanced loans to the tune of Rs. 6,09,62,000 in 1980-81 out of which Rs. 4,05,47,000 were advanced to traders and Rs 2,04,15,000 to non-traders. Similarly the money-lenders who were exempted under Section 22 of the Act advanced an amount of Rs. 8,47,35,000 as loans during 1980-81 to non-traders. As compared to advances during 1970-71, the loans advanced in 1980-81 showed a decline.

The maximum rates of interest upto 12 and 15 per cent per annum on secured and unsecured loans, respectively were in force upto July 1971. However, these rates were increased to 14 and 17 per cent per annum, respectively upto September 1974. Afterwards these rates were allowed to increase upto 18 and 21 per cent on secured and unsecured loans, respectively.

Top

CO-OPERATIVE MOVEMENT

Since the passing of India Act X of 1904, co-operative credit societies have been established in Bombay City, and the first co-operative credit society, known as the Bombay Pioneer Urban Co-operative Credit Society was registered in 1905. In 1906, the Bombay Urban and the Shamrao Vithal Co-operative Credit Societies were formed.

Subsequently a number of co-operative societies of various types were registered.

The total number of different types of co-operative societies during 1960-61 in Bombay was 1670 which increased to 2,965 in 1964-65 and further to 5,207 in 1970-71. Out of 5,207 co-operative societies, housing, urban credit and consumers' stores together accounted for 4,879, covering nearly 98 per cent of the total. The co-operative movement in Bombay is necessarily an urban movement. During 1975-76, the total number of co-operative societies of all types stood at 7645. The details of all types of co-operative societies in Greater Bombay are given in the following pages.

Primary Agricultural Credit Societies : At the end of June 1976, there were nine primary agricultural credit societies with a membership of 2881. The paid up capital of these societies amounted to Rs 12.94 crores, of which Government's share amounted to 30 lakh. The amount of deposits were to the tune of Rs 4.64 crores, where as the total liabilities were to the tune of Rs. 49.32 crores. The working capital of these societies was to the tune of Rs. 27.03 crores, the total investments Rs. 6.12 crores and total assets Rs 55.87 crores.

Out of nine societies, one society owned a godown with a storage capacity of 250 tonnes, three societies had one hired godown each with the total storage capacity of 850 tonnes. Only two societies dealt in advancing loans which amounted to Rs. 90,346 during the year 1975-76.

Urban Credit Societies: Joint-stock banks in the beginning used to cater to the needs of big entrepreneurs, industrialists and businessmen concentrated in big cities. These banks were not interested in developing business of common man. Under these circumstances, numerous petty traders and artisans, small salaried classes had to depend upon the money­lenders. Even now most of the families in industrialised cities like Bombay are found in debt. With the recent trend of urbanisation, the need for urban credit societies is assuming new significance.

The urban credit societies reach a common man in the distant cornets of the city where a joint-stock bank may not reach. In 1948-49, Bombay City had 269 urban credit societies with a total membership of 3,06,616; while the number of urban credit societies in suburban areas was 24 with a membeiship of 6,538. The percentages of population covered by these societies in the city and suburban areas were 20.5 and 8.3, respectively. Thus compared to the figures in Bombay State, the highest number of urban credit societies and the highest percentage of coverage of urban population were found in Bombay city. The co-opera­tive movement received impetus especially after 1960 and Bombay was no exception to it. During the decade 1960-61 to 1970-71 the number of urban credit institutions had been doubled in the city. During 1970-71, the number of credit societies was put at 905 with 10,41,000 members.

Urban Banks ('For details refer to ' Co-operative Banking ' under the section of Banking and Finance.): Prior to the lecommendations of Mehta-Bhansali Joint Re-organisation Report on Co-operative Movement in 1939, every urban credit society whose working capital exceeded Rs. 50,000 was called a major urban   bank.   According to  these  recommendations the former Bombay Government laid down that only those urban credit societies which actually undertook the business of banking and which had a paid-up share capital of not less than Rs. 2,000 could be called full-fledged urban bank. The first co-operative bank viz. the Shamrao Vithal Co-operative Bank was registered under the co-operative fold in 1906. It was mainly established to help the people of Saraswat community by giving them credit facilities. Since its inception, the Bank has showed an all-iound progress in its business.

During 1970-71, the total number of co-operative banks in Greater Bombay district was 69 with a total membership of 4,76,000. In 1975-76, the number of banks rose to 83 with a total membership of 4,73,636. However, the number of primary urban co-operative banks decreased to 75 by the end of December 1977. Of these, four were under liquidation and 11 were salary earners' co-operative banks.

Salary Earners' Societies : These are also known as Employees' Credit Societies and are mainly urban credit societies. The repayment of loans from the salaries of the members enables the societies to avoid the problem of overdues which is a common problem faced by all types of credit societies. During 1975-76, the number of such societies was 875 and their total membership was 12,18,635. Other particulars of these societies are given below:—

Particulars

Number

Total employees' credit societies

875

Members

12,18,635

Paid-up capital (Rs. in '000)

25,95,73

Working capital (Rs. in '000)

50,10,20

Distribution of consumers' goods—

 

(i)   Societies engaged

40

(ii) Value of goods purchased (Rs. in '000)

3,001

Goods sold—(Rs. in '000) :

 

(i)   Foodgrains (Rs. in'000)

1,492

(ii)  Others (Rs. in '000)

1,446

Profit—

 

(i)   Societies

837

(ii)  Amount (Rs. in '000)

27,104

Milk Supply Societies : Milk supply business is growing enormously in the vast area of Greater Bombay. The three dairies established by the State Government find it very difficult to cope up with the demand for milk. This very fact led to the growing of business of private milk suppliers. However, to overcome the competition and other problems of business such as difficulties in distribution of milk, transport, etc., some of them came together and formed co-operative societies. During 1964-65, there were as many as 27 dairy societies including two dairy federations in the Greater Bombay district. The total number of members of these societies was 1,184. The number of societies however, decreased by three during 1970-71, and their membership by 501. During 1975-76, the number of milk societies showed an increase and the same stood at 29, while the number of dormant societies was 4. The particulars of these societies are given below:—

Particulars
Number
Number of societies            29
Number of members -  
(i) Societies 15
(ii) individuals 806
Paid-up capital (Rs. in '000) 20,75
Working Capital (Rs. in '000) 96,97
Sales (Rs. in'000) 1,45,39
Profit -  
(i) Number of societies 17
(ii) Amount (Rs. in '000) 88
Number of persons employed 50

Consumers’ Stores: The development of consumers' co-operation as an economic system is well-associated with the name of Rochdale Pioneers. The consumers' co-operative movement received a great fillip during the First World War as a result of the abnormal conditions created by the war, but soon after the cessation of war, most of the stores had to be wound up. But since the Second World War, there had been a mushroom growth of these consumers' co-operatives, due to the noteworthy drive to instigate the consumers to come together fot their own interest in getting proper distribution of consumers' goods at fair prices. The movement gained ground and leceived momentum after Independence and more so with the progress of Five Year Plans. Now, most of the consumers' stoies undertake the sale of number of articles including the controlled commodities.

From 309 primary consumers' stores in Greater Bombay in 1965-66, the number rose to 389 in 1970-71. In 1975-76 the number of consumers' stores increased to 417, the details of which are given below:—

Particulars
Number

Number of primary consumers' stores

417

No. of members (in '000)

17,52

Share capital (Rs. in '000)

50.72

Working capital (Rs. in '000)

2,04.84

Total sales (Rs. in '000)

30,01.79

Number of societies in profit

290

Amount of profit (Rs. in '000)

12.35

Besides, the primary consumers' stores, there are wholesale consumers' stores in Greater Bombay engaged in the wholesale business of sale and purchase of consumers' goods. From 3 wholesale consumers' stores in Greater Bombay during 1964-65, the number increased to 8 in 1970-71 with a total membership of 47,306.

These eight stores had 55 branches scattered all over the district. During 1975-76, there was further increase in the number which stood at 15 with 99 branches with a total membership of 70,817. The details of these wholesale consumers' stores are given below:—

Particulars Number
Total number of wholesale stores 15
Total number of branches 99
Membership - 70,817
(i) Individuals     70,381  
(ii) Consumers' stores     420  
(iii) Others          16  
Share Capital (Rs. in '000) 91.48
Working capital (Rs.in'000) 4,61.79
Sales (Rs. in '000) 32,13.61
Purchases (Rs. in '000) 30,29.14
Profit -  
(i) Number of stores 9
(ii) Amount (Rs. in '000) 11.01
Loss -  
(i) Number of stores in loss 5
(ii) Amount (Rs. in '000) 21.02
Number of stores without profit or loss 1

Labour Contract Societies : In pursuance of its policy of progressive elimination of middlemen in the sphere of business, Government has decided to give preferential treatment to these societies in respect of entrusting work to them. These societies also get loans from the Government.

During 1960-61, there were only 27 labour contract societies with a total membership of 3,775. Their number, however, increased to 43 with 6,623 members in 1964-65 and again to 67 during 1970-71 with 9,147 members. In 1975-76, there were as many as 103 labour contract societies in Greater Bombay, the details of which are given below:—

Particulars

Number

Number of labour contract societies

103

Number of members—

 

(i) Labourers

13,187

(ii) Others

178

Paid-up capital (Rs. in '000)

11,73

Working capital (Rs. in '000)

49,82

Value of contracts executed (Rs. in '000)

1,65,93

Number of labourers employed

127

Income earned (Rs. in '000)

1,31,60

Profit—

 

(i) Number of societies

48

(ii) Amount (Rs. in '000)

2,44

Transport Societies : Another important sector of the co-operative movement is the organisation of transport societies. These societies were first organised at the end of Second World War with a view to benefiting ex-service personnel. The Government sanctioned financial assistance to these societies. The successful working of these societies of ex-servicemen prompted the organisation of transport societies by other persons. These societies however, received a set-back due to nationalisation of passenger transport.

During 1970-71, the number of transport societies in Greater Bombay was 12 with 1,376 members. The number increased to 13 in 1975-76, including one society of ex-servicemen. However, out of 13 societies, 8 were dormant during the same period. The details of these societies are given below:—

Particulars
Number
Number of societies 13
Number of members 2,097
Paid-up capital (Rs in '000) 4,42
Working capital (Rs in '000) 24,05
Profit -  
(i) Number of societies 5
(ii) AMount (Rs. in '000) 98

Fishermen's Societies: A fishermen's society helps the fishermen to avail of the facilities of credit and other requisites such as nets, yarn, launches, etc. Besides, these societies help the members in transportation of fish to the market places by plying launches and trucks with the aid of Government loan and subsidy. The members of the society can get a better price for their fish by selling the same directly in the market.

There is a great scope for the fishing industry to flourish because of the constant and heavy demand for fish in Bombay. The fishermen have now understood that if their business is organised on co-operative basis, it brings them more profit than the individually organised business. A fishermen's society also protects its members from the exploitation by traders and middlemen and thereby helps in improving the economic conditions of the fishermen.

During 1964-65, there were 8 societies of fishermen working in Greater Bombay, besides one apex body with the total membership of 1,757. In the following years, there seemed to be a great increase in the number of societies which rose to 13 during 1970-71 with a total membership of 3,580.

Weavers' Societies : The weavers' societies have not much scope to develop their business in Greater Bombay as most of the handloom cloth arrives in Bombay market from areas and regions outside Greater Bombay. Besides, the taste of the people for this cloth has also undergone considerable change during the last two decades due to heavy competition from mill-made cloth. All these factors together are responsible for creating hindrance in the smooth working of these societies in Bombay. However, there were 16 weavers' societies in 1960-61 which increased to 18 during 1965-66, but reduced to 17 during 1970-71. The total membership of these 17 societies during 1970-71 stood at 2,045.

Housing Societies : The problem of accommodation in Greater Bombay was felt severely after the partition of the country and the consequential influx of population from Pakistan. The Government therefore, came forward to assist in organising co-operative housing societies by giving land and financial aid. At present, different housing schemes such as subsidised industrial housing societies, low-income group housing societies, middle-income group housing societies, slum-clearance schemes etc., are implemented by various authorities.

The Saraswat Co-operative Housing Society was the first co-operative housing society formed in 1915.

The co-operative housing societies are of three types: tenant ownership housing societies, co-partnership tenant societies and the mixed typed which is the combination of the above two types.

The co-operative housing soceities of individuals other than backward class people and industrial workers are financed by the Maharashtra Co-operative Housing Finance Society established in 1958. This society gets finance mainly from the Life Insurance Corporation of India on the guarantee of the State Government. As the number of co-operative housing societies in Greater Bombay went on increasing, it was felt necessary as compared to the number in other cities to have a federal body of the housing societies. In view of this, the Bombay Co-operative Housing Federation Ltd., was registered in 1948. It is carrying on various activities to serve the interests of its member societies in particular, and help the movement of co-operative housing in Greater Bombay in general.

With a view to solve the huge housing problem in Greater Bombay, co-operative housing societies are playing a vital role. During 1964-65, there were as many as 1,635 housing societies with 6,432 members. Out of these societies, the number of societies of backward class people was 55. All these societies constructed 15,058 houses. The number of societies during 1971-72 rose to 4,053 with a total membership of 1,31,161. Besides, there were 88 housing societies of backward classes, nomadic tribes, vimukta jatis and other backward classes. These 4,053 societies constructed 47,953 houses during the same period. The share capital of these societies amounted to about Rs. 9.33 crores; while loans borrowed were to the tune of Rs. 51.32 crores. Out of the 88 housing societies of backward classes, nomadic tribes and vimukta jatis in 1971-72, the number of housing societies of scheduled castes (flood-affected) was 73 which constructed 600 houses during the same year. The share capital of these societies was to the tune of Rs. 28.51 lakhs, while the amount borrowed stood at Rs. 57.65 lakhs. In 1975-76, the number of housing societies rose to 5,564, the details of which are given below :—

Particulars

Number

(1) Number of societies

5,564

(2) Number of members

  17,07,306

(3) Paid-up capital (Rs. in '000)

   1,10,026

(4) Reserve and other funds (Rs. in '000)

30,899

(5) Borrowings (Rs. in '000)

  8,52,018

(6) Total liabilities (Rs. in '000)

  16,95,140

(7) Working capital (Rs. in '000)

  9,92,943

(8) Fixed assets (Rs. in '000)

   1,69,566

(9) Houses constructed by societies during the year 

355

(10) Value of houses constructed (Rs. in '000)

9,038

(11) Number of societies without profit or loss

605

(12) Number of societies in profit

3,294

(13) Profit (Rs. in'000) 

2,145

Other Industrial Co-operatives : Cottage industries and small scale industrial units assume a great significance in our economy as these units try to solve the severe problem of unemployment. In Bombay as elsewhere, the Government have not only offered financial assistance to these units but have given some concessions as also taken some measures towards promoting the sale of their products.

During 1960-61, there were as many as 82 industrial co-operatives in Greater Bombay, which however, increased to 85 in 1970-71. During 1975-76, the number of the societies stood at 79, of which 26 were dormant. These 79 societies included oil crushing, pottery, flaying and tanning, handicraft, general engineering, chemical engineering, leather goods, other village industries and miscellaneous industries. The details of these industrial societies are given below—

Particulars
Number

Number of societies

79
Number of dormant societies 26

Membership—

 

(i) Societies, individuals and others

5,637
(ii) Of dormant societies 1,788
Total liabilities (Rs. in '000) 12,454
Paid-up capital (Rs. in '000)—  

(i) Working capital

13,409

(ii) Total

2,603
(iii) Government contribution 851
Statutory reserve fund (Rs. in '000) 1,004
Other funds (Rs. in '000) 1,692
Deposits (Rs. in '000) 1,233
Total borrowings (Rs. in '000) 1,925
Other liabilities (Rs. in '000) 3,996
Total assets (Rs. in '000) 13,409
Closing stocks (Rs. in '000)—  

(i) Raw material

2,110
(ii) Finished goods 143
Fixed assets (Rs. in '000)—  

(i) Plant and equipment

2,704

(ii) Land and buildings

700
Profit—  

(i) Number of societies

44
(ii) Amount (Rs. in '000) 485
Loss—  

(i) Number of societies

26
(ii) Amount (Rs. in '000) 169
Number of societies without profit or loss 9

Industrial Estates : Bombay being a big industrial city, there is always a cut throat competition among the entrepreneurs. In the severe competition from large industries, a small-scale unit cannot stand on its own footing for the requirements of raw material, a plot of land, shed, etc. Such small units come together and start working on co-operative basis. During 1964-65, there were ten industrial estates working in Bombay. The year 1975-76 recorded a slow growth in the number of such industrial estates, as the same stood at 18 during 1975-76 against 15 in 1970-71.

The financial and other aspects of these industrial estates are given below:—

Particulars

As on 30th June 1976

Number of industrial estates

18

Membership—

 

(/) Individuals

873

(ii) Societies

3

Working capital (Rs. in '000)

26,687

Paid-up capital (Rs. in '000)

3,341

(i) Government (Rs. in '000)

25

(ii) Societies (Rs. in '000)

19

(iii) Individuals and others (Rs. in '000)

3,297

Statutory reserve fund (Rs. in '000)

329

Other funds (Rs. in '000)

2,398

Deposits (Rs. in '000)

6,047

Borrowings (Rs. in '000)

4,132

All other liabilities (Rs. in '000)

14,678

Total assets (Rs. in '000)

26,687

Investment (Rs. in '000)

961

Fixed assets (Rs. in '000)

19,295

Loans outstanding (Rs. in '000)

3,842

All other assets (Rs. in '000)

2,589

Difference between assets and liabilities (Rs. in '000)

(-)106

Employment provided by industrial estates

132

Employment provided by members

3,294

Greater Bombay Co-operative Board : Education and training in co-operation and propaganda for the spread of co-operative movement are undertaken by the District Co-operative Board under the guidance of Maharashtra State Co-operative Union Ltd. A similar district level co-operative institution known as the Greater Bombay Co-operative Board Ltd., was established in 1949. The area under its jurisdiction extends over the city and suburbs of Bombay. The membership of the board is of two types viz., ordinary membership consisting of all co­operative societies in Greater Bombay; and the associate membership consisting of individuals and representatives of the Maharashtra State Co-operative Union, Central Financing Agency, and the Co-operative Department of the State Government. On the 30th June 1976, there were 824 co-operative societies and 341 individuals as members of the Board.

The Board during 1975-76 conducted 27 Panch Committee Education Classes, two camps of the employees of the co-operative societies including one camp of women employees in the co-operative field, 8 education classes for employees of industrial societies. Besides, the board conducted two acquaintance meetings so as to keep acquaintance with the executives of different co-operative societies, and 14 training classes for women's co-operative societies.

The Board since 1960 publishes one Marathi fortnightly viz., Sahakari Jeevan. It has maintained a library equipped with a good collection of books on co-operation. It has also published some booklets giving yearly statistics of co-operatrve societies in Greater Bombay.

At the end of 1976, the membership of the Board comprised 817 primary co-operatives, 7 central co-operatives and 341 individuals.

In its efforts to spread co-operative movement in the State, the Board conducts two co-operative training colleges, one at Pune and the other at Nagpur, in addition to eleven co-operative training centres in the State and one evening school in Greater Bombay. Under the Member Education Programme, the Board holds secretaries' training classes, managing committee classes, various types of camps, study tours, rallies, etc. The Board also conducts functional courses in marketing, auditing, banking, dairy, etc.

During 1975-76, the number of persons on the roll of secretaries' training classes stood at 27, and the number of persons on the roll of managing committee classes stood at 292.

Co-operative Unions : During the early period of the Twentieth Century the co-operative movement in India suffered from various drawbacks. The Maclagan Committee of 1915 felt that the main hitch was nothing but lack of knowledge and information about the movement. As a result was expounded the idea of setting up a co-operative union, for imparting knowledge to workers in the field of co-operation.

Maharashtra State Co-operative Union, Bomhay: At the Regional Co-operative Conference held in 1917, it was decided to set up such a union and the same was registered on 13th July 1918, under the name of Bombay Central Co-operative Institute. In 1957, the name of the institute was changed to Bombay Provincial Co-operative Union. After the formation of the Maharashtra State in 1960, the Union was renamed as Maharashtra Rajya Sahakari Sangh.

The main objects of the Sangh are to impart education in co-operation and to function as a focussing centre of non-official opinion on various subjects affecting the co-operative movement, to further the spread of co-operative movement, to undertake publicity and publish literature.

The Sangh began its working in right earnest from its inception in 1918. The Sangh battled valiantly when the Thomas Committee Report of 1931-32, came as a death-blow to co-operative movement. During the period, the Sangh brought to the notice of the State Government, the deficiencies in the said report. Besides, the Sangh urged the Government not to take any policy decision with regard to co-operative movement without consulting the workers in the field of co-operation. The movement after making some changes in its structure was reinforced. The Sangh celebrated the Golden Jubilee of co-operative movement in 1954 and its own Golden Jubilee in 1971.

All District Co-operative Boards and Divisional Co-operative Boards which are registered separately under the Act, are affiliated to the Sangh, besides all apex Co-operatives, Urban and District Central Co-operative Banks and other important co-operatives in Maharashtra.

The Sangh has a special women's wing working under the guidance of the Women's Educational Advisory Committee which chalks out and executes educational programme for women. The Sangh convenes State Co-operative Conferences, organises seminars, symposiums, panel discussions, etc.

The Sangh brings out various publications including two fortnightlies one in Marathi viz., 'Sahakari Maharashtra' and the other in English known as 'the Bombay Co-operator ''; one quarterly in English viz., 'The Maharashtra Co-operative Quarterly'. The Sangh has audio-visual propaganda machinery as an effective means of carrying the gospel of co-operation in rural areas.

The principal source of revenue of the Sangh is the education fund collected from the co-operative societies on the basis of their working capital. The societies are under statutory obligation to pay their contri­bution to the fund. The income of the Sangh, during 1975-76 amounted to Rs. 42,000; while its expenditure during the same period amounted to Rs. 1,21,000.

Bombay District Central Co-operative Bank : This Bank was registered on 6th August 1974 and actually commenced its banking business on 12th February 1975. It has its head office at Palton Road, and has opened three branches, one each at Vile Parle, Dadar and Ghatkopar.

The area of operation of the bank covers the Greater Bombay district as also the New Bombay City. The number of members of the bank on 30th June 1975 was 469 which increased to 1545 upto 30th June 1980. The particulars of its membership are shown below:—

Particulars

 

As on 30th June 1976

As on 30th June 1980

Co-operative Societies

425

1,125

Individual members, Others  and Maharashtra State Government. 175 420

Total

600

1,545

The authorised share capital of the bank is Rs. 5.00 crores.

The paid-up share capital at the time of registration and commencement of banking business was Rs. 11,11,200 and Rs. 11,96,700, respectively. At the end of June 1980, the paid-up share capital of the bank was Rs. 58.42 lakhs, out of which an amount of Rs. 10 lakhs was by way of contribution from the State Government.

The particulars of deposits of the bank are shown below :—

(Rs. in lakhs)

 

Type of Deposits

1977-78

1978-79

1979-80

Percentage of increase over last year

1.

Current Deposits—
(a)    Societies
(b)    Individuals


65.89
12.77


1,10.68 8.13


1,61.47
8.67


45.88
6.64

2.

Savings Deposits-
(a) Societies
(b) Individuals


91.53
27.37


2,01.70 39.94


2,61.54
45.27


29.66
13.34

3.

Fixed Deposits—
(a)    Societies
(b)    Individuals


4,23.53     18.62


6,91.71
27.49


10,91.35 41.22


57.77
49.54

4.

Term Deposits-
(a) Societies
(b) Individuals



1.01


0.03
1.69


0.41
2.99


98.33
76.92

5.

Cash Certificates

0.04

0.11

1.09

89.90

6.

Call Deposits

15.00

 

10.00

 

 

Total

 6,55.76

10,81.48

16,24.01

50.16

The bank has become a member of the Deposit Insurance Corpora­tion of India, and deposits to the extent of Rs. 10,000 are insured by the said corporation. The bank has started fixed deposit scheme linked with various schemes such as Janata personal accident benefit policy scheme, surgical operation scheme, hospitalization scheme. Besides, the bank has also started pension scheme, cash certificate scheme, etc.

The surplus resources of the bank are invested in the form of shares and deposits in the Maharashtra State Co-operative Bank and Govern­ment bonds and debentures of the Bombay Municipal Corporation. The total investment of the bank increased from Rs. 40.55 lakhs during 1974-75 to Rs. 10,90.94 lakhs during 1979-80.

The bank being a central financing agency for co-operative sector, has started advancing different types of loans to various societies, such as, co-operative societies, urban credit societies, industrial co-operative societies, housing societies, labour-contract societies, fisheries societies, etc. in Greater Bombay and New Bombay area.

The particulars of the loans advanced by the bank upto the end of June 1976 and 1977 are as follows :—

Particulars
Amount (Rs)
Amount (Rs.)
Loans advanced (cash credits of overdrafts)
1,480.50
2,883.15
Bills discounted
6.42
2.60
Loans advanced (medium-term)
8.59
3.96
Total
1,495.51
2,889.71

The total loans overdue during 1975-76 amounted to Rs. 2.49 lakhs which increased to Rs. 6.91 lakhs during 1976-77. The outstanding short-term and long-term loans as on 30th June 1980 were Rs. 575.96 lakhs and Rs. 13.53 lakhs, respectively.

The actual profit gained by the bank shows an increasing trend in the succeeding years since its inception as the amount of profit went on increasing from Rs.0.71 lakh in 1974-75 to Rs. 6.73 lakhs in 1975-76, Rs. 13.00 lakhs in 1976-77 and Rs. 15.50 lakhs in 1979-80.

The bank has become a member of the Bombay Banker's Clearing House from 1st July 1977, and started participating in clearing house from the same date.

The bank issues demand drafts and collects cheques of the parties under mutual   arrangement   scheme for Maharashtra,  Gujarat   and Karnatak States. The bank being a member of the All India State Co­operative Banks Federation issues demand drafts on any State and Union Territory of India.

Maharashtra State Co-operative Bank Limited, Bombay : The Bank was established on October 11, 1911 by a special resolution of the then Government of Bombay. Originally, it started business by taking over from Government the function of financing agriculturists under the Scheme of Taccavi Loans. During the ensuing two decades of otherwise smooth working, the Bank, sometimes, faced critical periods. The Bank could, however, successfully weather through these storms and stood firm on its own strength and emerged even stronger than before. The World War II brought stability to agricultural prices and enabled the Bank to further consolidate its position. The astute and enlightened leadership thus provided by stalwarts in the co-operative movement and the progressive and pragmatic attitude of the State Government helped, to a large extent, in the continued progress and prosperity of the Bank.

During the year 1975 deposits improved to Rs. 162.52 crores from Rs. 151.46 crores in the year 1974 and maintained a satisfactory growth rate. The Bank undertakes various schemes for deposit mobilisation.

After attainment of Independence in 1947, the Bank has not only achieved phenomenal progress in its traditional activities but has also projected a significant image as a Development Bank resulting in consolidation and diversification of the co-operative effort in the State, as also provided a leadership to the co-operative sector of the State. The evolution of the crop loan system of financing agriculture, acceptance of the principle of State-participation in the share capital of co-operatives, the successful organisation of co-operative sugar factories and other processing industries, which became forerunners of producers' co­operatives, the successful implementation of the scheme for monopoly procurement of foodgrains and cotton as the sole agent of the State Government, and the starting of an industrial consultancy cell are some of the significant contributions to the development of co-operative endeavour in the State.

The essential feature of the working of the Maharashtra State Co­operative Bank is its role as a Development Bank. The Bank's entire career has been marked with a spirit of innovation and experimentation. The eminent position it occupies today in the co-operative sphere in the whole country has not been an accident, but it is the result of its sustained progressive policies. The Bank has, thus, played its role as a balancing agent, both in financial terms and in the matter of providing leadership to the co-operative movement. It has been fortunate to have the guidance from outstanding thinkers and the required assistance from the enlightenedadministration of the State, which has enabled it to occupy a premier position in the co-operative banks of the State. The progress of the Maharashtra State Co-operative Bank Limited, Bombay is shown below :—

(Rs. in crores)

Particulars
1973 (June)
1975 (June)

Paid-up Capital and Reserves

24.63

33.05

Deposits

127.81

162.52

Advances

164.61

233.69

Investments

39.33

50.21

Total income

11.84

20.02

Net profit

0.87

1.39

Dividend

0.50

0.78

Number of employees ..

1409

1690*

Number of branches    ..

28

34*

*The figures pertain to 30th September 1975.

Top

JOINT-STOCK BANKS

Historical Background : The present banking system is the outcome of innovations considerably influenced by historical growth and past traditions. The agency houses in Bombay were the pioneers of banking in the city. The earliest mention of a bank in Bombay is recorded in December 1720. It was established for the benefit and advantage of both the Company and the inhabitants, with the capital stock of one lakh rupees advanced by the Company from their cash. The management of the Bank was supervised by the then Bombay Government. During the first twenty-four years of its existence, the bank could not prosper, as the sums were lent on personal bonds and no care was taken of the securities pledged. Besides, some of the debts were of twenty years duration and the carts and houses mortgaged to the bank had fallen into decay even before the settlements of the accounts. Regulations were passed in 1774 to prevent further difficulties arising from large amount of out­standing debts. As a result, the bank worked smoothly for the following thirty years. Again in 1778, the sum due from bond creditors increased to Rs. 28 lakhs and the amount of debt due from the Government treasury to the bank also reached a high figure and the same was increasing annu­ally by the accumulation of interest. Therefore the then Government of Bombay proposed to fix the debt at a certain sum, write it off and establish a new bank. Thus, the career of the first bank was closed.

During the nineteenth century until the establishment of the Bank of Bombay, the banking business in Bombay was carried on by about hundred Hindu   shroffs. In 1835, a savings bank was   established by the then Government. As the commercial activities were rapidly expanding and Bombay had abundance of capital, the proposal of establishing a Bank of Bombay was first brought forward in 1836.

The Bank of Bombay commenced its working in 1840 with a capital of Rs. 52 1/2 lakhs. The business of the Bank of Bombay was confined to receiving deposits, keeping cash accounts, discounting bills and drafts and other investments. In fact until the establishment of Government Paper Currency Office in 1860, the Bank of Bombay also enjoyed the privilege of issuing bank notes. The Bank of Bombay was afterwards reconstruc­ted in the year 1868. In 1842, another company viz., the Bank of Western India was formed at Bombay to give every facility for the conduct of exchange and other legitimate banking business which was conspicuous by its absence in the charter of the Bank of Bombay. The business of the Bank of Western India was chiefly confined to exchange of loans and deposits and continued its working until 1845, when the shareholders of that bank formed themselves by a fresh deed of agreement into a new company viz., Oriental Bank. In 1845, another banking company under the name of Commercial Bank was formed mainly on the suggestion of native merchants for the purpose of encouraging and assisting the local trade as the two banks mentioned earlier could not serve that purpose. In 1851, there were two banks in Bombay, besides the Government Savings Bank and two branches of other institutions viz., the Oriental Bank of London and the Agra and United Service Bank. During the next five years, three more banks were opened, of which two were branches, one of the North-Western Bank of India and the other of the London and Eastern Bank. The new Chartered Mercantile Bank of India, London and China was of local origin. However, between 1855 and 1863 the branches of the London and Eastern Bank and the North-Western Bank closed their business in Bombay. But the Chartered Bank of India, Australia and China, incorporated by Royal Charter, opened an agency in Bombay and a new bank viz., the Central Bank of Western India was established in Bombay in 1860 with a capital of Rs. 50 lakhs. By 1862, two European Corporations viz., the Sind, Punjab and Delhi Corporation and the Comptoir d' Escompte de Paris, had opened branches in Bombay.

The period between 1861 and 1864 recorded great prosperity, and enormous wealth poured into the city as a result of the cutting off of the American cotton supply.

This sudden increase of wealth led to the widest speculation and resulted in the formation of numerous financial and banking institutions.

In 1867, the Bank of Bengal opened an agency and in 1869 the Honkong and Shanghai Bank and the Agra Bank of London opened their branches in Bombay City.

By 1870, there were eighteen local banks, besides five exchange banks and 32 financial associations and Corporations in Bombay. All of the newly founded banks did not survive after 1871, but the five exchange banks continued their banking transactions.

The banking business flourished steadily upto 1890 and suffered from stagnation between 1890 and 1905. The stagnation was the result of bad seasons and the out break of plague. The chief features of this stagnation period were the closure of the Land Mortgage Bank of India and London, the Agra Bank and the Oriental Bank Corporation; the closing of the Government Savings Bank and the winding up of the National Mortgage Bank.

In 1908, there were in all 12 banks in the city, of which three banks viz., Mercantile Bank of India Limited (1854) (The year in bracket shows the year of establishment of the Bombay branch.), Chartered Bank of India, Australia and China (1858), and the National Bank of India Limited (1863) had their head-offices in London. Besides, four other banks viz., Comptoir National d' Escompte (1861), Hongkong and Shanghai Banking Corporation (1869), Yokohama Specie Bank Limited (1894), International Banking Corporation (1904) had their head-offices at Paris, Hongkong, Yokohama and New York, respectively. The branch of the Alliance Bank of Simla was opened in Bombay in 1903. The Bank of Bengal (Agency) was established in Bombay in 1867.

In addition, the head-offices of three more banks viz., Bank of Bombay, Bank of India, and Indian Specie Bank Limited, were opened in Bombay in the years 1868, 1906 and 1906, respectively.

The development of the commercial banks since 1910, reflects the industrial and the economic growth of the country. The city of Bombay, being an industrial and trade centre, had a good share in the development of commercial banking. The Swadeshi movement that began in 1905 also gave a stimulus to Indian commercial banking and many of the big banks, such as the Central Bank of India and the Bank of India, were established during this period. There was a boom in commercial banking during 1906-1913 which was followed by a crisis during 1913-17. During the crisis, 87 banks failed, the majority of them were the small and weak banks, but the crisis weakened the confidence of the people in the banking system.

A large number of mushroom banks had been established by 1913 (in Western India, as in U.P. and Punjab). They conducted their business in a reckless manner. Their aggregate subscribed and paid-up capital were only 40 and 14 per cent, respectively of the authorised capital. They adopted high sounding names and there was no law to prevent them from resorting to any malpractices and undesirable means. There was mismanagement of funds and the directors misappropriated the funds.

The liquid assets being low, the financial position of the banks was precarious. The larger banks were rather operating on sound lines and were able to withstand the crisis. The difficulties of the banks during crisis were aggravated by the absence of a central bank and lack of co-ordination between these banks, presidency banks and the exchange banks.

There was a brief respite from 1918 to 1921, during which only 21 banks with a total paid-up capital of Rs. 14 lakhs failed. The war and the post-war boom gave another impetus to the starting of banks and a large number of banks, especially for financing industries were established. The post-war boom not merely in banking but also in the economy ended in 1922 and the number of bank failures increased. During 1922-24, it stood at 234 with a total paid up capital of Rs. 6 crores and 10 lakhs. One of the important banks was the Tata Industrial Bank which failed in 1923 and v/as merged later with the Central Bank of India. Of the 342 banks that failed in the country during 1913-14, 49 were in the pro­vince of Bombay, the largest number being in Punjab (81). During the Swadeshi movement of 1906, a large number of banks were established in Bombay due to the existence of the port and the speculative activities in cotton and silver in the market.

The dissatisfaction with the banking system led to a demand for enquiry in its working. In 1929, the Government of India appointed a Central Banking Inquiry Committee for a comprehensive survey of the banking system.

The development of commercial banks reflects that the multiplication of branches is a more marked feature of the growth of our banking system rather than extension to new places. The competition for new branches had been chiefly between the Imperial Bank of India and the Indian Joint-stock banks; after 1920 the branch expansion by exchange banks was relatively slow. By 1936, out of the total blanches of 1450, 99 belonged to exchange banks and 360 to Imperial Bank of India and out of the remaining two-third belonged to the smaller banks. The biggest six Indian banks had their branches concentrated in the city areas. The narrow area covering chiefly the Bombay province served by the Bank of India is the indicator of the deliberate policy to adhere to the biggest industrial and commercial centres of the land and that also in the British '  territory.

The details of bank failures in Bombay are given below:—

(1) Bombay Banking Company :—It was established in November 1898 and was liquidated during the banking crisis and panic of 1913-14. The bank had achieved reputation and inspired confidence due to one . of the directors being an eminent medical practitioner of Bombay. The agents were given full freedom by the directors and they used the funds for loans to themselves and prepared false balance-sheets. The shareholders were given good dividend and so did not inquire into the working of the Bank. But a suspicion was created in 1912 when the manager took a trip to United States of America and the depositors withdrew an amount of Rs. 5 lakhs in 1912-13. The director continued to endorse the working of the Bank and to assume the responsibilities he incurred for the hundis submitted to him. But the Bank had to suspend payments, when the withdrawals increased due to the failure of Central Bank of India in Bombay and the agents declared themselves insolvent. The liquidators reported that the bank only maintained one daybook and ledger and they suspected that the registers of securities and pre-notes were suppressed.

(2)The Pioneer Bank, Bombay : It was established in September 1911 and liquidated in December 1916. Its authorised and subscribed capitals were Rs. 50 and Rs. 15 lakhs, respectively and it collected just Rs. 2 lakhs as paid-up capital. In 1913, its deposits were to the tune of Rs. 3 lakhs. Most of the paid-up capital was fake, because as soon as it was collected on the shares it was loaned to the same persons on the security of the same shares. The advantage of this was taken by persons in financial difficulties. When petitions were made on this ground for the winding up of the bank it was argued that this related to internal management. But it was liquidated in 1916.

(3)Credit Bank of India : The bank was started in 1909, with an authorised capital of Rs. 100 lakhs, subscribed capital of Rs. 50 lakhs and paid-up capital of Rs. 10 lakhs. The bank gathered in its fold persons who did not have any training in their jobs. When the bank was liquidated in 1916, the manager of the bank, Jaffer Joosab pleaded ignorance; he even did not know the meaning of the term, 'bill of exchange'. Even the Chairman of the Board of Directors and the auditor pleaded ignorance for all the errors at the trial case.

(4)The Tata Industrial Bank : It was established in 1917 and was warmly supported due to the house of Tatas. But the termination of the war inflation and prosperity and the crisis of 1920, led to the decline in its dividends. These induced sobriety and the shareholders ulti­mately forced the amalgamation of the Bank with the Central Bank of India. The Bank was established with the objective of financing the industries of Tatas, but the post-war deflation accompanied by the difficulties of the Tata group of industries, disappointed the share­holders who had hoped for very high dividends for the Bank and they voted heavily for amalgamation in July 1923.

(5) The Indian Specie Bank :—It was established in March 1914, with an authorised capital of Rs. 2 crores, subscribed capital of Rs. 1.50 crores and paid-up capital of about Rs. 75 lakhs. It was due to the initiative and enterprise of Mr. Chunilal Saraiya who though a medical person had experience in banking. He played an important part in establishing the Bank of India in 1906 but as the authorities refused to appoint him as its manager, he withdrew. His reputation and ability was highly rated and he was able to attract eminent persons from business life of Bombay to be the directors. But events proved that Mr. Saraiya's inclination was rather speculative. There was a strong rumour that the Bank was cornering silver and in spite of the denial by the Chairman, the Commerce of Calcutta reported that the bank was buying the silver in market on a large scale. Yet the shares of the Bank were put up for Rs. 52 to Rs. 66. The businessmen and the local journal commended the manager Mr. Saraiya for earning a profit of Rs. 25 lakhs at a stroke on the sale of silver at enhanced rates to the Secretary of State in England and the Finance member in India. The Bank came to be linked up with well-known speculators in the city. The Bank resorted to various malpractices, creation of fictitious debtors was active in cotton share speculation and had accumulated losses of more than Rs. 1 crore. The failure of People's Bank in Lahore and the Credit Bank in Bombay in 1913 created panic in public. But the bank paid out Rs. 90 lakhs at the time of the run by the depositors. Yet deposits began to fall. Mr. Saraiya tried to re-establish the confidence and the bank continued to deal in a variety of speculative activities. Ultimately, the sad demise of the manager forced the directors to petition to the Government for voluntary liquidation.

By 1939, the commercial banking structure was firmly established in the country and especially in the industrial cities including Bombay.

However the commercial banks by 1939 had not yet touched two fields. They financed only the internal trade of the country, leaving the foreign trade largely to exchange banks. Secondly, they had little to do with the marketing of agricultural produce or discounting of agricultural bills.

The outbreak of the war and the extension of hostilities by Japan in December 1941, led to large withdrawals of deposits from the banks due to the panic created by the war. But the deposits began to return soon and on the whole the Indian banks stood well at the first shock of war. There­after, there was an enormous growth in bank deposits. The expansion of currency was primarily responsible for the rise in deposits, but the rise in prices of shares and commodities and general rise in prices also increased the demand for credit. In August 1939, the deposit liabilities of the sche­duled banks were Rs. 249 crores, but at the end of July 1944, they had risen to Rs. 759 crores. The demand deposits increased more than the time depo­sits. Between September 1939 and September 1944, demand liabilities rose from Rs.1,33 crores to Rs. 5,78 crores, whereas the time liabilities increased from Rs. 1,02 crores to Rs. 1,86 crores. This reflected a higher liquidity of assets of the banks. The cash ratio of the banks was high at 15 per cent by 1945. Advances and bills though higher declined as percentage to total deposits from about 53 in 1939 to 30 in 1944. The opportunities for commercial investments were curtailed and the banks diverted their funds to investment in war loans which rose to 40 per cent of total assets by the end of the war. The volume of capital and reserves had grown but not in proportion to the immense increase in deposits.

Another notable war-time trend was the great increase in the number of banking offices. In the eighteen months ending June 1944, the increase in number was by 688; in the quarter ending December 1943 it was 160; while in the first three months of 1944, the increase was 156. The rate slowed down and was 100 upto September 1944. The increase almost entirely was accounted for by the scheduled banks. Even as regards the expansion of deposits, it was mainly as regards the big banks, the ' Big Five' as they were known in addition to the Imperial Bank of India, the Bank of India, the Allahabad Bank, the Central Bank of India, Bank of Baroda and the Punjab National Bank. The smaller banks opened new branches without a parallel increase in resources, which was a source of weakness for the banking structure. Again new offices were largely opened in big towns to the neglect of small ones and this led to unhealthy branch competition and uneven development of the banks in the country as a whole.

Under the conditions of cheap money, low rates of interest, the bank rate remaining at 3 per cent during the war period, the commercial banks were able to expand and improve their position in the financial structure.

With the end of the war, the earnings and profits of the banks declined sharply and many banks were in difficulties and a number of banks failed. The partition of the country with Independence in 1947, adversely affected a number of banks which had branches or head-offices in Bengal and Punjab. A banking crisis was avoided by the Reserve Bank of India providing the necessary help to these banks. Yet a few banks failed during this period. By 1949, the economic conditions in the country were normal but the deficits in the budgets of the Union Government continued, which meant continuous expansion in the currency supply. The banking deposits continued to expand and with that the branches of the commercial banks. The Reserve Bank realised the need for the regulation of the banking system and suggested legislation which led to the Banking Companies Act of 1949. The banking system suffered from certain basic defects.

The defects were to be removed in the interest of establishing a sound banking system which was necessary for the rapid growth of the economy. The Banking Companies Act, 1949 was enacted for achieving this objective. Formerly, the joint-stock banks were governed by the General Companies Act of 1913. This Act was amended in 1936, and included some specific provisions for the banks such as, a bank could not be managed by a managing agency. Yet, there was no specific regulation of the banks. The Banking Regulation Act, 1949, is a comprehensive legislation applied to all banking companies including co-operative banks.

The period from 1949 to 1955 can be described as that of amalgamation of the banks and the consolidation of the banking structure. With the powers acquired by the Reserve Bank, a number of amalgamation of com­mercial banks were brought about. Small banks were amalgamated with bigger banks and the uneconomic branches of the banks were closed down. With the removal of the weak links in the banking structure there was an improvement in the efficiency of the banks. The deflationary trend during 1952-54 reduced the profits of banks and compelled the banks to reduce their costs of operations by improving their efficiency.

Under the Banking Companies Regulation Act of 1949, the Reserve Bank of India was given the responsibility of assisting as an intermediary in proposals for amalgamation of banks on a request from such banks. Reserve Bank of India attempted to merge the weak and inviable banks with strong and viable units. But the procedure of amalgamation was slow and complex. The Act was amended in 1950 to simplify the whole process. Yet amalgamations depended on the initiative and will of the banking companies. So the consolidation of the banking structure was dependent on the mercy of the small banks. But when the Pilai Bank was closed in 1960 and the Laxmi Bank was compulsorily wound up by the High Court, Bombay, the Indian banking system was widely disturbed. Thereupon the Banking Companies (Second Amendment) Act, 1960 was passed empowering the Reserve Bank of India to apply to the Central Government for an order of moratorium in respect of a weak and inviable bank. The Reserve Bank of India was empowered to prepare a scheme of reconstruction of the banking company or its amalgamation with another banking company, which had to be approved by the Central Government with modifications, if any. Thus the Reserve Bank of India was empowered to compulsorily merge a sick bank with a healthy bank. In preparing the scheme, the Reserve Bank of India was working with the State Bank of India; some weak banks were merged with the State Bank as its subsidiaries. Between 1960-65, the total number of mergers and amal­gamations under the Act were 188, out of which voluntary amalgamations accounted for 20 only. Between 1960-65, 56 banks were granted mora­torium. Of these, 45 were compulsorily merged with other banks and one was allowed to go into compulsory liquidation. Three banks were ordered to be wound up and one was allowed to amalgamate voluntarily with another bank. The number of compulsory mergers was 30 in 1961, though it slowed down later on.

The bank mergers have been greatly beneficial to transferee banks, transferor bank, depositors and the solidarity of the banking structure of the country as a whole. As the amalgamations were brought about through the Reserve Bank of India, the interests of the depositors were properly looked after. The weak and inviable banks were being eliminated and this improved the strength of the banking structure. The quality of the structure went on improving and a healthy tone was provided to the system. In the following statement is shown the statistics of the bank mergers :—

Year

Total number of bank mergers

Year

 

Total number of bank mergers

1960

7

1963

 

22

1961
36
1964
79
1962
11
1965
33

1960-65

 

 

Total    .

188

Training institutes for bankers were established by the Reserve Bank and internal examinations were introduced. The trained banking personnel were being provided to the banks. All this introduced efficiency and maturity in the operations of the banks. The Reserve Bank was also able to establish its effective control over the commercial banks. The use of the powers given by the Banking Regulation Act of 1949 and the functions of licensing, inspection, supervision established a continuous contact between the banks and Reserve Bank of India. By the end of the First Plan, 1955-56, the Reserve Bank of India had established its position as the leader of the commercial banks and the money market in the country.

With economic development of the country under the plan and the rapid growth of industries, the demand for credit went on expanding. The commercial banks had consolidated their position during the earlier period and were able to expand credit after 1956.

There have also been a number of basic functional and structural changes in the working of the commercial banks. In a survey of the Reserve Bank of India ia April 1972, according to the data supplied by 43 banks (including all Indian Banks with deposits of Rs. 25 crores and above), the medium-term credit to industry provided by them amounted to Rs. 78.6 crores which was equal to 14 per cent of their total outstanding credit to industry. The establishment of the Industrial Development Bank of India has shifted the responsibility of financing large industries from the commercial banks, yet the refinancing of industrial loans advanced by commercial banks stood at Rs. 38 crores on June 30, 1969. In spite of the State financing institutions, the commercial banks are extending their role in providing term finance to industries.

There was also a change in the security pattern of bank credit. For bank advances, between 1951 and 1962, advances against agricultural commodities rose by 51 per cent, while those against manufactures and minerals rose by 100 per cent which again reflects the importance of new industries.

There have been certain structural changes in the commercial banking system. An important feature has been a marked reduction in the number of banks through the elimination of weaker units as a result of voluntary or compulsory mergers. There had been no contraction in banking facilities, though there had been a decline in the number of banks from 566 in 1951 to 89 in June 1969. During this period there had been an increase in the number of bank branches from 4,151 to 8,254. There had been a rapid expansion of branches to the non-urban areas.

With the nationalisation of fourteen major Indian banks by the ordinance in July 1969, a revolutionary change took place in the banking structure. These 14 banks had 3,770 branches (49 per cent of the total), deposit liabilities of Rs. 2,742 crores (58 per cent of the total) and advances of Rs. 1,744 crores (55 percent of the total) on 31st December 1968. About 83 per cent of the banking business was controlled by the Public Sector (1970) with these fourteen banks and the State Bank of India and its subsidiaries. Out of the remaining 17 per cent business in the private sector, 6 per cent of the banking business was in the hands of the Indian sche­duled banks (36), 10 per cent was in the hands of banks incorporated outside India (15) and the non-scheduled banks having only 1 per cent of the total. Through the control of the Reserve Bank of India and the institutions such as Industrial Development Bank of India and Agricultural Refinance Corporation, the commercial banking structure is linked up to various State-sponsored financial institutions in the country and an attempt is made to build up a co-ordinated financial infrastructure consistent with the needs of rapid economic growth of the country.

Before the nationalisation of commercial banks in 1969, an experiment with a scheme of social control of banks was introduced. It was short­lived, yet it led to the establishment of the National Credit Council at an all-India level. It was envisaged as an instrument of credit planning and it was to lay down guidelines for the banks with regard to the provision of credit. On the council various economic interests were represented. The council indicated the quantity and quality of credit that banks should furnish for each sector and each industry in the economy.

Under the social control policy, the banking companies were asked to reconstitute their board of directors to represent the various economic interests in the country. Each board was to have a professional banker as it's full-time chairman. In 1968, the Banking Regulation Act was amen­ded accordingly to implement the policy of social control over banking credit. Every foreign bank was to have an advisory board. The banks were prohibited from advancing loans to directors or to concerns in which the directors were interested. The social control provisions widened the scope of the powers of Reserve Bank of India as regards advances of the commercial banks. The Government was even empowered to take over any bank which consistently refused to follow social control provisions and policies.

The Government of India set up the National Credit Council with the Finance Minister as Chairman and the Governor of the Reserve Bank of India as the Vice-Chairman.

The Indian commercial banks accordingly reconstituted their boards and the foreign banks had set up advisory boards. The policy of social control was introduced by 1967, but the experiment was hardly imple­mented and there was the demand for nationalisation of commercial banks. A number of arguments were advanced in favour of the proposal and they were accepted as the basis for the decision of nationalisation of 14 big Indian commercial banks in 1969.

It was argued that over the past twenty years, a very close link had been established between the commercial banks and well-known industrial houses. This led to a kind of concentration of financial and economic power which was reflected in the functioning of the commercial banks. Further the directors of these banks attempted to use the resources of the banks for the industrial concerns in which they were interested. This led to the diversion of funds from the rural and semi-rural sectors to the large-scale industries situated in the urban areas. The small industrial and business units suffered from the scarcity of funds as they had to compete with the big concerns. These arguments against the functioning of private commercial banks were examined by a number of individuals and groups in the country. For quite some time in 1968, after the introduc­tion of social control policy, discussion on the question of nationalisation of commercial banks was very wide-spread. Ultimately in 1969, the Government announced its decision to nationalise 14 big banks in the country. The private banking companies were compensated by the Government. The total amount of compensation payable to 14 nationalised banks had been determined at Rs. 87.4 crores.

The immediate impact of nationalisation was the acceleration of deposit mobilisation and of lending to the priority sectors. Aggregate deposits of the scheduled commercial banks registered an increase of Rs. 621 crores in 1969, as against a rise of Rs. 493 crores in 1968. This can be largely attributed to the ambitious plan of branch banking adopted by the nationalised banks. Direct and indirect finance extended to agriculture by the nationalised banks increased from Rs. 27 crores at the end of June 1969 to Rs. 66 crores at the end of June 1970. By adding the assistance given by the State Bank and it's subsidiaries, the total assistance to agriculture rose upto Rs. 216 crores at the end of June 1970. The advances of the nationalised banks in favour of road transport operators had been more than doubled during the period of seven months rising from Rs. 6 crores to Rs. 13 crores. Self-employed persons received Rs. 2 crores worth of bank finance at the end of January 1970 as against Rs. 30 lakhs at the end of January 1969. Taking the entire public sector banking system, the assistance to the newly defined priority sectors and the so-called neglected sectors increased by Rs. 166 crores to Rs. 604 crores by the end of January 1970. The target for the opening of the branches especially in the rural areas had been placed at 71,350 in 1970, as against 1,035 in 1969.

Even after the Regulation of Banking Act of 1949, there had been failures of banks from year to year. The bank failure partly were attri­buted to the laissez-faire policies of the Government and the laxity of the laws and dishonesty of the promoters. The bank failures had a very deterrent effect on the confidence of the public in the banking institutions, and there were always cumulative runs on the banks with the consequential danger of banking crisis. In 1950, the Rural Banking Enquiry Committee had stressed the need for the establishment of a Deposit Insurance Corporation but no decision was taken. In 1954, the committee on finance for private sector under the Chairmanship of Shri A. D. Shroff had recommended the introduction of deposit insurance in the country.

The Banking Companies Act was also amended in 1960, to give addi­tional powers to the Government and the Reserve Bank to provide for expeditious payments to the depositors of banks in liquidation, and rehabilitate banks in difficulties. But these measures were not sufficient, and hence, bank nationalisation was inevitable.

Banking in the city of Bombay : (1) 1960-66 : The data of the functioning and development of banks in the city of Bombay is available from 1960. The same is given in Tables Nos. 1 and 2.

During the period 1960-66, the number of reporting bank offices increased from 186 to 327. The total average of month-end deposit balances increased over the period from Rs. 3,48 crores to Rs. 6,65 crores;

TABLE NO.1

BANKING BUSINESS OF SCHEDULED COMMERCIAL BANKS BOMBAY CITY

 

 

 

 

 

Average of month-end deposit balance

Total debits to

Total of approved limits as at the end of the year

 

Year

No. of
reporting
offices

Government and Quasi-Government bodies

Business and Individuals

Total (2+3)

Government and Quasi-Government bodies

Business
and
Individuals

Total (5 + 6)

Cash Credits and Overdrafts

Other

Government and Quasi-Govemment bodies

Business and Individuals

Government and Quasi-
Government
bodies

Business       and          Individuals   

Total (8+9 + 10+11)

 

1

2

3

4

5

6

7

8

9

10

11

12

1960

186

41.3

307.1

348.4

545.8

5,652.0

6,152.8

4.8

317.6

173.9

496.3

1961

204

45.6

313.4

359.0

612.4

5,938.4

6,550.8

1.8

321.7

185.3

508.8

1962

224

48.6

331.4

380.0

692.7

6,446.6

7,139.3

5.3

382.0

2.3

207.7

597.3

1963

266

64.6

383.6

448.2

893.5

6,653.6

7,547.1

9.6

488.8

0.8

255.8

755.0

1964

299

77.0

454.8

531.8

1,140.3

7,736.6

8,876.9

20.8

523.0

1.3

316.4

861.5

1965

.321

78.8

532.1

610.9

811.5

8,792.0

9,603.5

23.8

558.2

0.7

404.1

986.8

1966

327

81.0

583.6

664.6

1,019.4

10,063.5

11,082.9

26.8

629.8

4.8

365.0

10,026.2

TABLE No. I - contd.

Year

Debits to Cash Credits and Overdrafts

Average of month-end bank Loans and Bills

Credit outstanding during the year Cash Credits and
Overdrafts

Total (15 + 16+ 17+18)

Annual Rate
of Turnover
of Current
Deposits

Overall
Annual Rate
of Turnover

 

Government
and Quasi-
Government
bodies

Business and Individuals

Government and Quasi-Government bodies

Business and Individuals

Government and Quasi-Government bodies

Business and Individuals

 

Business and Individuals

Business and Individuals

 

 

 

13

14

15

16

17.

18

19

20

21

1960

8.9

1,998.5

 

89.8

1.8

185.1

276.7

39.6

15.8

1961

  19.3

2,163.4

97.9

0.7

208.9

307.5

46.0

17.0

1962

39.50

2,370.2

1.0

100.6

2.2

207.6

311.4

50.0

16.3

1963

   91.2

3,207.8

2.4

144.3

3.8

282.8

433.3

49.4

15.1

1964

  121.2

3,898.2

2.6

174.2

11.9

319.4

508.1

48.2

16.3

1965

226.4

4,770.2

5.2

185.7

19.0

371.6

581.5

43.0

16.9

1966

334.7

5,079.3

5.3

223.8

15.9

373.5

618.5

51.4

17.3


TABLE NO. 2
DEPOSITS,CREDITS AND OVERDRAFTS WITH SCHEDULED COMMERCIAL BANKS, BOMBAY

(Rs. in crores)

Year No of reporting offices Average of month-end deposit balance Total debits to Total of approved limits of cash credits and overdrafts as at the end of the year Debits to cash cxredits and overdrafts Annual rate of tunrover of Current Deposits Overall annual rate of turnover
    Curretn Savings Fixed

Total(3+4+5)

Current Deposits Accounts Savings Deposit Accounts

Fixed Deposit Accounts

Total (7+8+9)        
1
2
3
4
5
6
7
8
9
10
11
12
13
14
1960
186
1,36.7
36.7
1,75.0
3,48.4
54,31.6
62.3
7,03.9
61,97.8
3,22.4
20,07.4
39.7
16.2
1961
204
1,25.1
42.5
1,91.4
3,59.0
57,40.5
73.7
7,36.6
65,50.8
3,23.5
21,82.7
45.9
17.7
1962
224
1,24.7
47.9
2,07.4
3,80.0
62,40.9
92.3
8,06.1
71,93.3
3,87.3
24,09.7
50.0
16.9
1963
266
1,35.8
62.2
2,50.2
4,48.2
66,90.1
1,26.2
7,30.8
75,47.1
4,98.4
32,99.0
49.3
15.8
1964
299
1,57.7
75.0
2,99.2
5,31.8
78,00.1
1,53.3
9,23.5
88,76.9
5,43.8
40,19.4
49.5
16.8
1965
321
1,89.3
90.8
3,30.8
6,10.9
82,96.6
2,06.0
11,00.9
96,03.5
5,82.0
49,96.6
43.8
17.2
1966
327
1,87.7
1,19.6
3,57.3
6,64.6
96,43.0
3,18.5
11,21.5
1,10,82.9
6,56.6
54,14.0
51.4
17.8

current deposits increased from Rs. 1,37crores toRs. 1,88 crores; savings from Rs. 37 crores to Rs. 1,20 crores; and fixed deposits from Rs. 3,48 crores to Rs. 6,65 crores. The total debits to total deposits increased from Rs. 61,98 crores in 1960 to Rs. 110,83 crores in 1966. Total approved limits as at the end of the year (i.e., cash credits and overdrafts) increased during the period from Rs. 3,22 crores to Rs. 6,57 crores and the debits to cash credits and overdrafts rose from Rs. 20,07 crores to Rs. 54,14 crores. Annual rate of turnover of current deposits increased from 40 to 51 which reflects an increase in the velocity of circulation of money. The overall annual rate of banking turnover increased from 16.2 to 17.8. All these rising trends indicate the expansion of demand for and the faci­lities for the provision of credit in the city. The expansion of industries over the period and the opening of new branches increased the deposits of the commercial banks and also the mobilisation of larger financial resources by the banking system.

The development in banking in the city of Bombay can be further reviewed in the context of the development in Maharashtra. The Reserve Bank data gives the trends over the period 1960 to 1966. The data for relates to the former bilingual State and therefore the data from to 1966 is relevant. The total number of reporting banking offices in the State increased from 525 in 1961 to 811 in 1966. Total deposits (average month-end deposit balances) increased over the same period from Rs. 4,18 crores to Rs. 8,04 crores. They were mostly the deposits of the business and individuals. The deposits of Government and quasi-government bodies in 1966 were Rs. 95 crores. The credits advanced by the banks were mainly in two forms, loans and bills and cash credits and overdrafts. Total of the approved limits by the banks in Maharashtra under both these heads were Rs. 5,63 crores in 1961 and Rs. 11,44 crores in 1966. These reflect the increasing demand for credit from the private business sector due to the expansion of industries and business in the State. Annual rate of turnover of current deposits (businessmen and individuals) in 1961 was 45 which increased to 51 by 1966, reflecting an increase in the velocity of circulation of money due to the larger business demand for banking facilities.

The data in relation to the city of Bombay indicates similar trends as those in Maharashtra, but in a more sharper manner. The number of reporting offices in the city increased from 186 in 1960 to 327 in 1966. The average of month-end deposit balances increased from Rs. 3,48 crores in 1960 to Rs. 6,65 crores in 1966. Total debits to various individuals, Companies etc., increased over the period from Rs. 61,98 crores to Rs. 1,10,83 crores and the total of approved limits as at the end of the year increased from Rs. 4,96 crores to Rs. 10,26 crores. Debits to cash credits and  overdrafts increased from Rs.  19,99 crores to Rs. 50,79 crores. Average of month-end bank credit outstanding; during the year increased from Rs. 277 crores in 1960 to Rs. 619 crores in 1966. Annual rate of turnover of current deposits (businessmen and individuals) increased over the same period from 39 to 52, reflecting quite a sharp increase in the velocity of circulation of bank credit. All these trends indicate the rapid expansion of industries and business in the city of Bombay, more remarkable than in other areas of Maharashtra and the consequential expansion of credit and the banking facilities to these sectors. The commercial banks were able to expand their supply of credit in a flexible manner and satisfy the rising demand in the city.

(2) 1966-70 : Among the eight big cities in India, Bombay was the most important in respect of the total number of bank offices, deposits and credit. During 1966-70, Bombay added more offices and recorded higher increases in total deposits and credit than any other centre. Bank offices increased by 135. There has been quite significant increase in the deposits in city branches, though the growth rate of deposits in Bombay might appear lower than that in several other centres. However, considering the high level of deposits in the centre, the quantum of rise in terms of a percentage growth rate of 11.6 is actually quite substantial. The fact that Bombay combined the largest increase in offices and deposits with a fairly marked rise in the average deposit per office shows the extraordinary potential that the city offers for deposit mobilization. In Bombay, credit increased by a larger amount than deposits, the credit-deposit ratio was close to 100 per cent. For all banks in the metropolitan centres taken as a whole, new offices accounted for slightly more than a quarter of the total deposit increase over the period.

There was heavy concentration of banking in business areas. Although the number of offices situated in these areas was relatively small, a strikingly high proportion of the total banking business in the centre was handled by them. This was not merely in terms of credit but equally important in respect of deposits. The areas were further responsible for much of the deposit acceleration over the period 1966-70. The proportion of deposits secured by the offices in these areas was also considerable. In each of these centres, the business areas had well over half of the city's aggregate deposits, though the number of bank offices operating in these areas was accounted for around a third of the total. In Bombay, during 1966-70, out of the 135 new offices opened, only 21 were in this area group while in Calcutta, the proportion was slightly higher at 15 out of 75. It can be stated that the intensity of banking in these areas increased as indicated by the sizable rise in the average deposits per office. The business areas were responsible for at least half the deposit increase in the city as a whole. The individual accounts may not be important here as in business areas, deposits would be mainly institutional or commercial and generally consequent to or following an extension of credit.

The following statement  shows the residential area-wise percentages of banking business undertaken in Greater Bombay in 1970:—

Residential Area* Percentage of offices in the area to the total in the centre percentage of deposits in the area to the total in the centre
I
18.7
9.7
II
7.0
5.0
III
29.1
9.5
Total
54.8
24.2

 

Residential Area
Average deposits per office (Rs. in lakhs)
Percentage of cerdit in the area to the total in the centre
Average credit per office (Rs. in lakhs)
I
121.9
3.1
38.4
II
167.3
2.5
82.1
III
76.7
4.0
32.0
Total
103.8
9.6
40.6

* The details of areas covered under these residential groups are  given on the subsequent page.

The metropolitan cities provide remarkable scope for banking business. The marked rise in the average deposit per office indicated that the spread of the metropolitan city branch net-work had indeed been accompanied by an overall rise in deposits and not as was sometimes feared in business. The deposits that centre obtained from even a pure residential or non-business area of a city were generally higher than what an office in an urban or rural centre would bring in. The average deposit per office of rural branches of scheduled commercial banks was only Rs. 13.4 lakhs (September 1970). As against this the average even among the residential areas in Bombay was Rs. 103.8 lakhs. This degree of deposit potential was advantageous in evolving the strategy of branch expansion in Greater Bombay.

The following statement shows that in 1951, Bombay city accounted for over a fourth (26.5 per cent) of the all India figure of current deposits and less than a third (30.3 per cent) of their debits. Over the years, the share of big cities (Bombay, Calcutta, Madras and Delhi) declined and in 1966, Bombay and Calcutta accounted for 23.8 per cent and 14.5 per cent of total current deposits, as regards debits to the share of these cities declined to 27.1 per cent and 22.0 per cent, respectively. The following statement gives statistics of current deposits, debits and turnover of current deposits in Bombay during 1951, 1956, 1961 and 1966:—

(Amount in crores of Rs.)

 

1951

1956

1961

1966

Particulars

Amount

Percentage to all India total
Amount
Percentage to all India total

Amount

Percentage to all India total

Amount

Percentage
to all India total

                 

Current Deposits

1,11.2

26.5

1,34.4

29.2

1,25.1

24.6

1,87.7

23.8

Debits to Current Deposits Accounts

53,23.4

30.3

58,17.6

29.2

57,40.5

27.8

96,43.0

27.1

Turnover of Current Deposits

47.9

 

43.3

 

45.9

 

51.4

 

* Figures for the years 1951 and 1956 are year-end figures of deposits; while for the years 1961 and 1966 figures of amount are month-end averages during the years.

In 1951, the four big cities (Bombay, Madras, Calcutta and Delhi) accounted for as much as 60.6 per cent of total current deposits and 69.9 per cent of total debits. In 1966, these four cities accounted for 51.1 per cent of current deposits and 59.9 per cent of debits thereto. The turnover of current deposits in 1966 at Bombay was 51.4 crores; at Calcutta 68.2 crores; and at Madras 56.3 crores.

The following statements show the comparative statistics of banking business in Bombay:—

Particulars
1966
1970
Number of bank offices                    347 482
Outstanding deposits (Rs. in crores) 7,30 11,29
Credit (Rs. in crores) 6,90 11,12
Average deposit per office (Rs. in lakhs) 2,10 2,34
Average credit per office (Rs. in lakhs) 1,99 2,31
Compound annual giowth rate of deposits N.A 11.6
Compound annual growth rate of credit N.A 12.6

 

Particulars Increase during 1966-70
No. of bank offices
135
Total deposits (Rs. in crores)
3,99
Total credit (Rs. crores)
4,22

 

Average deposit per office of new offices at the end of every year of establishment Rs. in lakhs
First year of establishment
15.61
Second year of establishment
35.54
Third year of establishment
50.40
Fourth year of establishment
60.30
Fifth year of establishment
80.57

Areas covered under the respective business and residential areas in Bombay are shown in the following statement :—

Area number
Areas covered
Business area I Fort, Ballard Estate.
Business area II

Kalbadevi, Zaveri Bazar, Bhuleshwar, Mandvi, Opera House, Sandhurst Road, Lamington Road, Thakurdwar.

Residential area I

Substantial extent of business activities— Worli,    Prabhadevi,   Mahim,    Bandra, Dadar, King's Circle, Sion, Wadala.

Residential area II

More selected or exclusive residential localities—Cumballa Hills, Walkeshwar Road, Peddar Road, Breach Candy, Colaba, Churchgate.

Residential area III

Less affluent or more middle class neighbourhoods—Chembur, Ghatkopar Vikhroli, Bhandup, Kurla, Mulund, Santacruz, Vile Parle, Andheri, Malad, Borivli.

The business area-wise information of banking business in Bombay during 1966 and 1970 is shown in the following statement :—

Business area
Percentage of office in the area to the total in the centre
Percentage of deposits in the area to the total in centre
Contribution of the area to deposit growth in the centre
Average deposit per office (Rs. in lakhs)
Percentage of credit in the area to the total in the centre
Average credit per office (Rs. in lakhs)
1966
1970
1966
1970
1970
1966
1970
1970
1970
1
2
3
4
5
6
7
8
9
10
Business area I
17.0
13.4
58.8
58.5
58.0
7,27
10,16
74.1
12.67
Business are II
21.9
18.9
11.1
10.1
8.2
1,07
1,25
6.1
75
Total for Greater Bombay
38.9
32.3
69.9
68.6
66.2
3,78
4,96
80.2
5,72

TABLE. No. 3
List of Commercial Banks (Directory of Bank Offices, December 1980 Reserve Bank of India.) and Their Branches in Greater Bombay, at the end of December 1980

Name of Bank

No. of branch offices, sub-branch offices including head office, transacting banking business

No. of offices not transacting banking business, i.e. registered offices or administrative offices, etc.

(1)

(2)

(3)

Allahabad Bank

14

1

Andhra Bank

7

1

Bank of Baroda

69

10

Bank of Cochin

1

 

Bank of India

70

4

Bank of Karad

3

 

Bank of Madura

5

 

Bank of Maharashtra

58

 

Bank of Rajasthan

5

 

Banares State Bank

1

 

Bharat Overseas Bank.

3

 

CanaraBank

59

6

Catholic Syrian Bank .

2

 

Central Bank of India .

62

6

Corporation Bank

15

1

Dena Bank

77

3

Federal Bank

4

1

Grindlays Bank

11

 

Habib Bank

1

 

Indian Bank

25

 

Indian Overseas Bank .

29

1

Jammu and Kashmir Bank

1

 

Karnatak Bank

5

 

Laxmi Commercial Bank

2

 

Maharashtra State Co-operative Bank 

    32

 

New Bank of India

8

 

Oriental Bank of Commerce

9

 

Punjab and Sind Bank.

11

 

Punjab National Bank.

20

11

Ratnakar Bank

2

 

Reserve Bank of India.

2
(1 central office)

 

Sangli Bank

14

 

South Indian Bank

2

 

State Bank of Bikaner and Jaipur

8

 

State Bank of Hydrebab
11
Sate Bank of India
85
1
Sate Bank of Indore
3
1
Sate Bank of Mysore
5
Sate Bank of Patiala
1
Sate Bank of Saurashtra
5
Sate Bank of Tranvancore
2
1
Syndicate Bank
37
3
Tamilnadu Mercantile Bank
1
Union Bank of India
65
1
United Bankof India
14
1
United Commercial Bank
33
1
United Industrial Bank
1
United Western Bank
15
1
Vijaya Bank
17
2
Vyasa BAnk
3

Deposits and advances of all scheduled commercial banks in Bombay are given in the following statement:—

(Rs. in lakhs)

As on last Friday of
No of functioning offices
No of reporting offices
Deposits (Rs)
Advances* (Rs)
1
2
3
4
5
June 1970
480
469
10,40,60
10,34,56
June 1973
606
606
15,83,67
14,13,94
December 1975
N.A
729
21,70,78
20,36,66

* In the case of advances, the reporting offices are recorded as 463.

The above statement reveals the increasing trend in the total deposits and advances of all scheduled commercial banks in Bombay along with the number of banking offices. The percentage of deposits to advances has also increased from about 87.5 to 91.0 during 1973-75.

The deposits and advances of scheduled commercial banks in Bombay according to type as on last Friday of June 1973 revealed that the fixed deposits were the largest in amount.

As against this, the savings deposits as on last Friday of June 1973 stood highest in respect of number of accounts, and the same are shown in the following statement :—

(Amount in lakhs of Rs.)

No. of Functioning offices

No. of
Reporting
offices

Current

Savings

No. of accounts

Amount

No. of accounts

Amount

           

606

606

3,40,441

3,93,34

2,34,8,673

3,12,43

 

 

 

 

 

 

Fixed

Others

Total

No. of accounts

Amount

No. of accounts

Amount

No. of accounts

Amount

6,64,704 8,46,73 22,233 28,40 33,76,051 15,80,90

                                                       
The affluent society and businessmen have the tendency to put large amounts in the fixed deposit accounts. However, the number of fixed deposits is generally less than that of savings deposits.

The deposits and credits of 939 scheduled commercial banks at the end of March 1981 amounted to Rs. 50,50,87 lakhs, and Rs. 47,21,74 lakhs, respectively.

Table No. 4 reveals the occupation-wise classification of outstanding credit of scheduled commercial banks in Greater Bombay.

TABLE No. 4
Occupation-wise Classification of Outstanding Credit of Scheduled Commercial Banks in Greater Bombay

(Amount in thousands of Rs.)

Occupation As on the last Friday of
  June 1973 December 1975
  No of Accounts Amount No of Accounts Amount

I. Agriculture and Allied activities:

855 25,49,11 714 38,21,62
1.Agriculture excluding plantations 492 20,66,97 391 35,88,47
(i) Direct finance 306 1,09,11 176 3,11,17
(ii) Indirect finance 186 19,57,86 215 32,77,30
2. Allied activities 337 1,84,02 299 1,94,06
3. Plantations 26 2,98,12 24 39,09
         
II Industry: 34,010 7,01,70,21 39,546 11,13,97,30
1. Mining and quarrying 50 96,10 36 1,27,80
2. Manufacturing 23,639 6,32,87,54 28,075 10,01,30,18
3.Electricity generation, Transmission and distribution 236 17,88,17 275 22,47,70
4. Construction 562 16,09,91 643 17,23,02
5. Transport 3,623 13,09,70 3,407 34,85,45
6. Personal and professional services 5,900 20,78,79 7,110 36,83,15
         
III. Trade 24,995 2,41,70,69 26,118 3,02,69,60
1.Wholesale trade 17,558 2,25,76,66 17,556 2,79,11,71
2.Retail trade 7,437 15,94,03 8,562 23,57,89
         
IV. Personal loans (including consumer durables) 25,933 29,65,07 36,150 43,93,34
V. All others 26,412 97,72,79 29,724 70,68,86
Total bank credit (I+II+III+Iv) 1,12,205 10,96,27,87 1,32,252 15,69,50,72
Of which: samll scale industry 16,964 97,96,25 19,546 1,47,86,53

It can be seen from the table relating to occupation-wise classification of outstanding credit that the total bank credit of scheduled commercial banks increased from about Rs. 10,96 crores in June 1973 to about Rs. 15,69 crores in December 1975. The increase in the amount of bank credit can also be noticed in all the occupational groups, such as, agricultural and allied activities, industry, trade and personal loans.

This trend indicates the expansion of industries and business in Bombay. In the group of industries, manufacturing industries absorbed the highest amount of bank credit which amounted to about Rs. 6,33 crores in June 1973, and subsequently increased to about Rs. 10,01 crores in December 1975. As against this, the mining and quarrying industries had utilised the lowest amount of bank credit which amounted to about Rs. 92 lakhs and about Rs. 1,28 lakhs in June 1973 and in December 1975, respectively.

The classification of outstanding credit of scheduled commercial banks in Greater Bombay as in the month of June 1980 (Banking Statistics—BSR. June 1980, published by Reserve Bank of India.) is shown below:—

Occupation

No. of accounts

Amount in 000's of Rs.

(1)

(2)

(3)

Agriculture

5,536

490,7,52

Industry

37,682

19,85,22,26

Transport operators

10,337

2,75,13,29

Services

17,718

50,07,38

Trade

37,054

6,59,24,98

Personal loans

73,846

75,77,04

All others

59,932

1,08,29,29

Total Bank Credit

242,105

32,01,64,76

Of which for small scale units

24,264

2,54,69,94

Nationalised banks : By an ordinance of 19th July 1969, 14 banks were nationalised. They are (i) Central Bank of India, (ii) Bank of India, (iii) Punjab National Bank, (iv) United Commercial Bank, (v) United Bank of India, (vi) Canara Bank, (vii) Dena Bank, (viii) Syndicate Bank, (ix) Union Bank of India, (x) Bank of Baroda, (xi) Allahabad Bank, (xii) Indian Bank, (xiii) Bank of Maharashtra, and (xiv) Indian Overseas Bank.

All these nationalised banks have their branches located in Greater Bombay. Information regarding the working of some of these banks is given in the following pages.

(1) Indian Overseas Bank : The first branch of the Indian Overseas Bank in Bombay City was opened in the Fort area in September 1941 and upto nationalisation, nine more branches were added to the list and the number went upto 18 by the end of June 1973.

Upto June 1973, these eighteen branches together had gathered deposits to the tune of Rs. 22.87 crores which formed about 14 per cent of the total bank deposits in the country.

The type-wise break-up of deposits in these branches by the end of June 1973 is shown below:—

Type of Account Amount (Rs. in lakhs) Percentage to total deposits
1. Current accounts
6,59.02
28.8
2.Savings accounts
4,82.26
21.1
3.Term deposit accounts
11,45.97
50.1
 
22,87.25
100.00

Of the bank's total credit in the country, about 12.4 percent i.e., Rs. 12.15 crores was utilised to finance various sectors of the economy in Bombay city. The credit-deposit percentage ratio for all the eighteen branches together, stood at 53.1.
The following statement gives the amount of credit given by these branches to various sectors of the economy in Bombay by the end of June 1973:—

Type of credit

Amount (Rs. in lakhs)

(a) Priority sector

 

1. Agriculture

46.1

2. Small scale industry

1,53.5

3. Transport operators    

14.2

4. Retail trade

18.4

5. Professional and self-employed

5.7

Total of priority sectors

237.9

(b) Others—

 

1. Medium and large industry     

4,28.5

2. Wholesale trade

4,11.4

3. Others

1,37.1

Total  

977.0

Grand Total   

12,14.9

Apart from the disbursement of the total credit of Rs.12.15 crores to various sectors of the economy, the bank invested Rs. 4.60 crores in various securities issued by the State Government and other State sponsored agencies.

Since nationalisation, the bank has introduced several new services including a number of attractive need-based savings schemes.

(2) United Commercial Bank : Prior to the nationalisation of banks, the bank was known as the United Commercial Bank Ltd. and was established in Bombay in 1943. It is one of the biggest five commercial banks of the country. Upto September 1971, the bank opened 21 branches in Bombay.

Particulars of the loans advanced by the bank to small scale industries, agriculturists and others as on 31st December 1971 are shown in the following statement :—

Particulars
No of Accounts
Amount (Rs. in thousands)
Raod transport 83 8,51
Small scale industries 307 1,55,68
Retail Trade 105 21,43
Agriculture 3 96
Small business 24 59
Professionla and self-employed 30 1,29
Education 6 47
Exports 71 1,16,55

The type-wise deposits of all the Bombay branches of the bank are shown in the following statement :—

As on
No of branches
Deposits (Rs in thousand)
Advances (Rs. in thousands)
Bills(Rs. in thousands)
    Demand Savings Time Total  
29th December 1967
16
10,47,41
3,53,09
13,37,35
27,37,85
17,07,94
5,21,86
31st December 1971
21
13,44,32
6,33,38
19,15,84
38,93,54
26,24,28
6,01,04

(3) Central Bank of India : The bank had opened 57 branch offices in Greater Bombay upto 1972, of which only 52 offices transacted banking business.

In 1968, all the branches together excluding ten branches had the total deposits of Rs. 35,87,60,000 and the number of accounts in all types of deposits stood at 1,49,849. The amount of total deposits alongwith the number of accounts in Bombay branches increased considerably in 1972 and the same stood at Rs. 89,28,49,000 and 3,05,816 accounts, respectively. This statistics reveals the progress achieved by the branch offices in Bombay.

Table No. 5 reveals the ownership of deposits of the branch offices of the bank in Greater Bombay as in 1972.

TABLE NO.5
OWNERSHIP OF DEPOSIT, CENTRAL BANK OF INDIA, BOMBAY BRANCHES 1972

(Rs. in 000')

 

Fixed Deposits

Current Accounts

Saving Deposits

Other Deposits

Total Deposits

Total Deposits

No. of Accounts

Amount

No. of Accounts

Amount

No. of Accounts

Amount

No. of Accounts

Amount

No. of Accounts

Amount

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

(9)

(10)

(11)

Manufacturing concerns

103

2,68,12

1,094

78,51

 

 

1

50,00

1,198

3,96,63

Trading concerns

295

57,12

12,501

8,82,57

38

3,02

3

1,13

12,837

9,43,84

Personal

50,425

30,16,50

5,141

2,45,00

214,474

27,79,70

6,442

1,03,82

276,482

61,45,02

Banking companies

1

4,00

15

3,95

 

 

 

 

16

7,95

Business

172

52,25

4,593

44,5,32

17

32

24

1,40

4,806

4,99,29

Public institutions and trusts         

402

3,03,70

326

42,91

229

17,30

25

13,80

982

3,77,71

Others

3,660

2,26,03

3,487

2,34,45

1,836

39,68

512

57,89

9,495

5,58,05

Total 55,058 39,27,72 27,157 19,32,71 216,594 28,40,02 7,007 2,28,04 3,05,816 89,28,49

The following statement analyses the advances of the bank according to purpose in Greater Bombay in 1968 and 1972 (The statistics for the years 1968 and 1972 exclude the advances of eleven and two branches, respectively as the same is not available with the Head Office of the Bank):—

 

1968
1972
Purpose
No of accounts
Amount (Rs. in '000)
No of accounts
Amount (Rs.in '000)
1 2 3 4 5

Industry

103

1,39,09

669

9,68,42

Commerce 

164

52,86

437

1,49,25

Agriculture

 

 

27

13,88

Personal and professional

298

28,02

1,000

70,79

All others

684

1,82,46

2,340

4,87,15

Total   

1,249

4,02,43

4,473

16,89,49

The advances of the bank in Greater Bombay also revealed an increa­sing trend as the same increased from about Rs. 4,43 lakhs in 1968 to Rs. 16,72 lakhs in 1972.

The advances of the branches in Greater Bombay according to security are shown in the following statement :—

(Rs. in thousands)

Security
1968
1972
     
Food articles 12,00 20,52
Industrial raw materials 50,09 3,88,80
Plantation products   98
Manufacture and minerals 1,42,14 5,98,11
Other securities 2,38,48 6,64,03
Total secured advances 4,42,71 16,72,44

(4) Bank of India : The Bank of India was incorporated in September 1906 in Bombay under Act VI of 1882 with subscribed capital of Rs. 100 lakhs divided into one lakh shares of the face value of Rs. 100 each and the paid-up value of Rs. 50 each.

Of this, 55,000 shares were privately applied for and the remaining shares were offered for public subscription. A sum of Rs. 10 per share was payable on application, Rs. 15 per share on allotment and Rs. 25 per share two months thereafter. The National Bank of India Limited was the banker to the issue.

The bank started its business on 1st November 1906 in Bombay and by the end of the year, the working funds amounted to Rs. 70 lakhs. Even though, in the early stages the bank followed a conservative policy with regard to its operations, it was justified in view of the banking crisis of 1913. The bank overcame all the difficulties through careful manage­ment of its funds, especially by maintaining adequate liquidity. The steady increase in the business of the bank during the first decade called for a strengthening of its capital structure.

The bank adopted changes in the memorandum and articles enabling the bank to raise the authorised capital from Rs. 1,00 lakhs to Rs. 2,00 lakhs by the creation of one lakh shares of Rs. 100 each. The shares were issued for Rs. 50 lakhs atRs. 50 paid-up value and the premium of Rs. 50 per share went to strengthen the reserve fund.

In 1920, the bank opened its first branch in Ahmedabad. In 1921, the bank was invited to manage the clearing house of the Bombay Stock Exchange. In 1927, the bank opened its branch at Bullion Exchange and soon after it took over the management of the clearing house of Bombay Bullion Exchange and the same is still continued.

The Great Depression of 1930 and the subsequent fall in the prices of agricultural commodities, such as, of oilseeds, cotton and raw jute affected the business of the bank adversely. It became difficult for the bank to recover several of its advances and interest rates began to soar. Besides, the book value of its investments also came down heavily. However, the bank emerged from the Depression with added strength, and during the decade 1929-39, the advances of the bank increased as also the working funds. The profits of the bank increased from Rs. 18.72 lakhs to Rs. 21.70 lakhs during the same period. During the decade 1929-39, the bank opened 12 new branches of which seven were in Bombay.

The Second World War created many acute problems for the bank. The initial reverses for the allies resulted in heavy withdrawal of funds from the bank, but thereafter the large defence expenditure incurred by the Government brought substantial increase in the deposits. After the War, the bank began to expand its activities abroad and opened its first foreign office in London in 1946. The post-war years marked the expansion of the bank's branches and operations in foreign countries.

In 1951, the paid-up capital of the bank was further increased by Rs. 50 lakhs and a premium of Rs. 50 lakhs was realised by the issue of shares.

The bank in 1968 set up specialised cells to deal with financing of agriculture, small-scale industries and other priority sector activities. Besides, the bank has also set-up a residential training college at Andheri to provide training to its staff.

Soon after the nationalisation of the bank in July 1969, the Bank of India Limited, became the Bank of India and the chairman was appointed as the custodian of the bank. The policies of the bank were progressively re-oriented to serve large national objectives.

Upto 1975, the bank had opened 66 offices in Greater Bombay, of which 64 were engaged in transacting banking business and 36 were equipped with the safe deposit vaults.

(5) Canara Bank : The Canara Bank was originally established in 1906 as the Canara Hindu Permanent Fund Limited which later became Canara Bank. The first branch of the Bank was started in Greater Bombay in 1928 and the same was located in Fort area. Upto 1971 the bank opened 40 branches in Bombay.

The various types of deposits increased tremendously from 1967 to 1971 as also the number of accounts in the Bombay branches of the bank. The same are given in the following statement :—


(Rs. in thousands)

As on the last Friday
of December

Fixed Deposits

Current Account

Savings Deposits

Other Deposits

No. of accounts

Amount Rs.

No. of     accounts

Amount Rs.

No. of     accounts

Amount Rs.

No. of accounts

Amount Rs.

1967

22,127

14,57,77

12,109 

9,58,84

1,07,239 

9,46,05

8,178 

1,45,29
1969 20,368 19,10,65 14,324 8,49,39 1,31,287 11,61,85 13,954 60,56
1971 28,308 39,29,72 19,272 14,19,67 2,11,671 19,50,33 20,447  91,50

On the last day of March 1967, the overdrafts and cash credits of the branches in Greater Bombay amounted to Rs. 23.24 crores and the same increased to Rs. 34.67 crores on the same day of March 1971. The following statement further throws sufficient light on the growth of business of the bank in Greater Bombay.

As on the last Day of March
Advances including bills purchased and discounted to
Bills purchased and discounted (Amount) (Rs in thousands)
 
Industry
Trade
 
 
No of accounts
Amount (Rs. thousands)
No of accounts
Amount (Rs. thousands)
1967
977
13,98,75
2,067
7,52,51
15,25,32
1969
948
17,65,11
1,648
6,17,50
19,26,36
1971
2,166
25,29,66
1,677
8,99,03
31,45,20

(6) Syndicate Bank : The Syndicate Bank was established in 1925 at Udipi. Its first branch in Greater Bombay was started in 1937. Upto December 1975 the Syndicate Bank had opened 31 branch offices in Greater Bombay, of which only 28 were engaged in the banking transac­tions and the remaining were administrative offices. The registered office of the bank is now situated at Manipal in Karnatak State. The particulars of advances to the priority sectors by the branches in Greater Bombay as on the last Friday of February 1972 are given below :—

Name of priority sector 
AS on last Friday of 1972
No of Accounts
Amount (Rs. in thousands)

Road transport operators

154

16,84

Small scale industries

734

2,01,24

Retail trade

322

22,13

Agriculture (direct)

60

29,26

Small business

67

4,42

Professional

280

15,67

Educational

100

5,28

Exports

350

4,81,71

Total of all sectors 
2,067
7,76,55

During December 1967 to December 1971, the deposits of the branches in Greater Bombay increased from Rs. 9 crores to about Rs. 30 crores and the amount of advances rose from Rs. 6 crores to Rs. 24 crores.

(7) Union Bank of India : The Bank was founded in the year 1919 and was incorporated on 11th November 1919 as a limited company.

The branch expansion of the bank in Greater Bombay is shown below:—

As on the last Friday of Number of branches

December 1968

37

December 1969

42

December 1970

44

December 1971

46

December 1975

56

All types of deposits of the bank increased from Rs. 29 crores in 1966 to about Rs. 44 crores in 1971.

(8) Bank of Baroda : The first Bombay branch of the bank was opened on Apollo Street in 1919. In April 1961, the New Citizen Bank was amal­gamated with the Bank and as a result, seven branches of the New Citizen Bank were declared as the branches of the Bank of Baroda. Upto 1970, including these seven branches, there were, in all 43 branches of the bank in Greater Bombay.

The following statement gives the ownership of deposits of its branches in Greater Bombay as existed in 1969 :—

(Rs. in thousands)

Type of deposit

No. of Accounts

Deposits (Rs.)

 

 

 

Fixed deposits

30,894

4,09,737

Current account deposits

20,849

1,75,656

Savings deposits

14,632

1,86,397

Other deposits

7,747

23,618

Total
74,122
7,95,408

The data for the years 1967 and 1969 further reveals the fact that the amount of advances according to purpose increased from Rs. 83 crores to about Rs. 97 crores as shown in the following statement :—

(Rs. in thousands)

Purpose Year ended 1967 Year ended 1967
  No.of accounts Advances (Rs.) No.of accounts Advances (Rs.)
Industry 596 7,01,483 1,276 7,91,909
Commerce 592 72,357 1,133 90,242
Agricluture 1 1,871 10 987
Personal and Professional 1,139 28,422 3,032 42,285
All others 273 28,746 582 53,355
Total 2,601 8,32,879 6,033 9,78,778

The highest amount of advances was provided for the purpose of commerce and the smallest amount was granted for agriculture.

As regards the amount of advances according to security, the highest amount was recorded against the security of industrial raw materials and the same amounted to Rs. 695 lakhs in 1967 and Rs. 721 lakhs in 1969. However, the total secured advances of all the branches of the bank in Greater Bombay rose from Rs. 73 crores in 1967 to Rs. 78 crores in 1969.

(9) Indian Bank : The first branch of the Indian Bank was established in the Fort area as early as in 1936, but it took about 15 years to start its second branch at Mandvi. On the last Friday of December 1972, there were in all 15 branches of the bank in Bombay city. The number of branches, however, rose to 19 in December 1974. All these branches were equipped with safe deposit vault facility.

The deposits and advances of these branches are noted in the following statement:—

(Rs. in lakhs to decimal point)

As on the last Friday of

No. of branches

Deposits (Rs.)

Advances (Rs.)

December 1972

15

1,821.60

896.76

December 1973

18

2,278.74

1,109.15

December 1974

19

2,769.30

1,378.18

(10) State Bank of India : The origin of the State Bank of India goes back to the first decade of the Nineteenth Century, when the Bank of Bengal, the first of the three Presidency banks was established in 1806 and received its charter in 1809. The other two Presidency banks were the Bank of Bombay (1840) and the Bank of Madras (1842). The Imperial Bank of India was established in 1921 by amalgamation of the three Presidency Banks. Until 1935 i.e., till the establishment of the Reserve Bank of India, the Imperial Bank of India acted as the sole banker to the Government. After the establishment of the Reserve Bank of India in 1935 the Imperial Bank ceased to function as banker to the Government. As the commercial banks including the Imperial Bank of India were prospering only in the urban sector, the All India Rural Credit Survey Committee recommended the creation of the State Bank of India by taking over effective control from the Imperial Bank of India.

The State Bank of India was accordingly constituted on 1st July 1955 as successor to the Imperial Bank of India under the State Bank of India Act, 1955. Latter, the State Bank of India (Subsidiary Banks) Act was passed in 1959 enabling the State Bank to take over eight former State associated banks as its subsidiaries. As a result of the merger of two of the subsidiaries, there are now seven subsidiaries, viz. (i) State Bank of Bikaner and Jaipur, (ii) State Bank of Hyderabad, (iii) State Bank of Indore, (iv) State Bank of Mysore, (v) State Bank of Patiala, (vi) State Bank of Saurashtra, and (vii) State Bank of Travancore.

Alike its predecessors, the State Bank of India along with some of its subsidiaries, conducts Government banking business as the agent of the Reserve Bank of India at centres where the latter does not have an office or branch of its banking department. Further, it also maintains currency chests and small coin depots at various centres all over the country ensuring adequate and continued circulation of currency notes amongst the public and withdrawing the used and soiled currency notes from circulation.

The bank is a major customer in the giltedged market. In addition to its scheme of financing of agriculture, the activities of the bank include financing of small-scale industries and small business, and foreign exchange business. In fact in 1950, the bank formulated a liberalised scheme of financing small scale industries and is continually responding to the growing needs of this sector by providing increasing credit facilities on liberal terms and under simplified procedures. The bank's role in the field of export promotion is not confined to export financing alone but extends to exploring and developing new markets for Indian exports.

The first branch of the bank other than the main branch was established, at Girgaum in 1916, and the number of branches in Greater Bombay upto September 1974, increased to 50. Of these, only six branches did not provide the safe deposit locker facility.

Various schemes initiated by the bank include issuing of gift cheques, traveller's cheques, recurring deposits, premium prize deposit certificates, etc.

Top

RESERVE BANK OF INDIA

History : The Reserve Bank of India was established on April 1, 1935 as per the Reserve Bank of India Act, 1934.

Its predecessor, the Imperial Bank of India performed certain central banking functions such as a banker to Government and a banker's bank to some extent. However, the regulation of note issue and management of foreign exchange continued to be the direct responsibility of the Central Government.( For details refer to Reserve Bank of India, Functions and Working, 1983, published by the Reserve Bank of India.) In 1926, the Hilton Young Commission recommended that the dichotomy of functions and division of responsibility for control of currency and credit should be ended. The Commission suggested the establishment of a Central Bank, to be callSd the' Reserve Bank of India', independently of the Imperial Bank whose separate continuance was considered necessary for enlargement of banking facilities in the country. The Gold Standard and Reserve Bank of India Bill to give effect to this recommendation was introduced in the Legislative Assembly in January 1927, but was dropped on account of sharp differences of opinion. The Indian Central Banking Enquiry Committee (1931) however, strongly recommended the establishment of the Reserve Bank at the earliest. The question again assumed importance during the process of constitutional reforms in India. Ultimately a fresh bill was introduced into the Indian Assembly on 8th September 1933 which was passed on 22nd December 1933. It received the Governor General's assent on 6th March 1934. After some preliminaries, the Bank was inaugurated on April 1, 1935.

The Bank was originally constituted on the pattern of leading central banks in Western countries. Its share capital was Rs. 5 crores, divided into five lakhs fully paid-up shares of Rs. 100 each. Since then there has been no change in the capital of the Bank.

From January 1, 1949, the Reserve Bank entered upon its career as a State-owned undertaking. The Act of 1948 empowered the Central Government to issue such directions to the Bank as it might, after consultation with the Governor of the Bank, consider necessary in public interest.

Functions : The main functions of the Reserve Bank are broadly the same as those of central banks in other countries. It has the sole right to issue notes, and it acts as a bankers' bank, holding custody of their cash reserves and granting them accommodation in a discretionary way. The Bank possesses not only the usual instruments of general credit control such as the Bank Rate, open market operations and the power to vary the reserves requirements of banks, but also extensive powers of selective and direct credit regulation. The power of moral suasion is also employed in a comprehensive manner. Another, important function of the Bank is to conduct operations of Government, and to advise it on economic matters in general and on financial problems in particular. The Bank has also an important roleto play in the maintenance of the exchange value of the rupee. It acts as the agent of the Government in respect of India's membership of the International Monetary Fund. It exercises conttol over payments for and receipts from international trade and other kinds of foreign exchange transactions in the national interest.

The Reserve Bank of India grants financial accommodation to the co-operative banking sector (besides the scheduled banks) for financing agricultural operations and marketing. It set up the Agricultural Credit Department for this purpose.

The nationalisation of 14 major Indian scheduled commercial banks on July 19, 1969 was an important landmark in the history of Indian Banking. The immediate task set for the nationalised banks was mobilisation of deposits on a massive scale and lending of funds for all productive activities, particularly to the weaker sectors of the economy. On April 15, 1980, six more private sector banks were nationalised, extending further the area of public control over the country's banking system. As a result of nationalisation, the Bank has been successful in attaining the goals of promotion of monetisation and monetary integration of the economy, filling in the gaps in financial infrastructure, meeting the credit needs of the economy subject to the requirements of sectoral allocation, and above all in rendering support to the planning authority in productive deployment of investible funds so as to maximise growth with stability and social justice.

Organisation: The general superintendence and direction of the Bank's affairs is vested in the Central Board of Directors with headquarters at Bombay. As the Chairman of the Central Board of Directors, the Governor is the Bank's chief executive authority who is assisted by the Deputy Governor. There are four Local Boards with headquarters in Bombay, Calcutta, Madras and New Delhi.

The primary functions of the Bank regarding note issue and general banking business are exercised through two separate departments, viz., the Issue and the Banking Departments. These departments constitute, what are known as the ' Local' offices (In the Reserve Bank of India Act, a distinction is made between the terms ' office 'and ' branch', of the Bank. The Local Boards in Bombay, Calcutta, Madras and New Delhi are designated as offices, while those in the other centres are termed as branches.) branches of the Bank, and in Bombay they are located in the Fort area and Byculla, respectively, besides at many other places in India. Formulation of policies concerning monetary management, supervision of banks, extension of banking credit facilities, exchange control, management of foreign exchange reserves and rendering of advice to Government on economic and finan­cial matters are mainly done at the headquarters (central office) of the Bank in Bombay. The headquarters of the Department of non-banking companies is located in Calcutta.

The Central Office has many departments which are mentioned below :—

1.Secretary's Department.
2. Department of Banking Operations and Development.
3. Industrial Credit Department.
4. Agricultural Credit Department. (These departments were closed as the bulk of their functions were taken over by
the National Bank for Agricultural and Rural Development from July 12, 1982.
)
5. Rural Planning and Credit Cell.
6. Rural Planning and Credit Department. (It was created on July 12, 1982 to perform certain functions relating to rural credit.)
7. Exchange Control Department.
8. Department of Currency Management.
9. Department of Expenditure and Budgetory Control.
10. Department of Government and Bank Accounts.
11. Department of Non-Banking Companies (Regional Office).
12. Department of Economic Analysis and Policy.
13. Department of Statistical Analysis and Computer Services.
14 Credit Planning Cell.
15. Department of Administration.
16. Personnel Policy Department.
17. Management Services Department.
18. Legal Department.
19. Inspection Department.
20. Premises Department.

Top

URBAN CO-OPERATIVE BANKS

An urban co-operative bank supplies short-term and medium-term credit to its members. The area of operation of such a bank is restricted to a district or a town or a part of the town, or even a factory or a department. Membership is open to all persons residing within the area of operation and the liability of members is limited. However, only with the prior permission of either the Registrar or Assistant Registrar of Co-operative Societies, a person can become a member of more than one bank. Capital is raised by issuing shares, accepting deposits on current, savings and fixed deposit accounts and by borrowing from the central financing agency.

The loans advanced by the bank are on personal security, on mortgage of property or on security of valuables pledged or produce hypothecated. Cash credits are allowed and overdrafts are sanctioned on any of the securities. It carries banking operations like issue of hundis and drafts and collection of cheques, hundis, drafts, etc.

The year 1906 recorded the registration of first co-operative Bank in Bombay viz., the Shamrao Vithal Co-operative Bank. The Bank was mainly established to help the people by way of credit to the needy members of Saraswat community. During 1970-71, there were 69 co-operative banks in Bombay. The number increased to 83 during 1975-76.

The urban co-operative banks are of two categories, viz., (i) Primary Urban Co-operative Banks, and (ii) Salary Earners' Co-operative Banks. There were 75 primary urban co-operative banks in Greater Bombay on 31st December 1977; of which 4 were under liquidation. Besides, there were eleven salary earners' co-operative banks in Greater Bombay. These banks catered to the credit required by their members for consumption purposes.

The following statement shows the number of primary urban co-operative banks (Registrar of Co-operative Societies, Bombay) in Greater Bombay along with their different types of deposits as on 31st December 1977 :—

No. of primary
urban co-opera­tive banks

Total no. of branches
excluding their Head
offices

Deposits

Total

Current

Savings

Fixed

Others

71

97

10,75,179

1,39,641

4,31,669

4,48,421

55,448

The classification of loans and advances by the primary urban co-operative banks reveals that the loans and advances are given for various purposes such as :—

  1. small scale industries ;
  2. small traders, small shopkeepers and small businessmen for trade and commerce ;
  3. transport operators ;
  4. education ;
  5. construction and/or repairs to house property, dwelling houses etc ;
  6. repayment prior to debt ;
  7. consumption purposes ; and
  8. others.

The rate of interest charged by every co-operative bank varies according to the purpose and also according to the term of repayment i.e. short-term and medium-term.

The following statement reveals the number of salary earners' co­operative banks in Greater Bombay alongwith their branches and deposit mobilisation :—

(Rs. in thousands)


No. of salary operative banks

Deposits as on 31st December 1977

Total

Savings

Current

Fixed

Others

17

1,58,298

48,668

2,218

1,01,360

6,052

Top

FOREIGN EXCHANGE BANKS

Historical Background : The foreign exchange bank is defined as the bank whose head office is outside India. Though there is no rigid differentiation between foreign exchange banks and other Indian Commercial Banks, the basic point of distinction is that they invest a considerable portion of their funds during the busy season in discounting foreign trade bills. The financing of foreign trade in India is largely handled by them.

Most of these exchange banks were established during the latter part of the 19th century and the earlier part of the present century. The extension of the external trade and absence of a well-developed modern banking structure were responsible for the expansion of the foreign exchange banks. A list of foreign exchange banks which had established their branches in Bombay upto 1925 is given below :—

 

Name of bank

Head office

Year of establishment
of Agency or branch of the Bank in Bombay

(1)

Yokohama Specie Bank Ltd.

Yokohama

1894

(2)

Netherlands India Commercial Bank.

Holland

1920

(3)

Hong  Kong  and Shanghai Banking Corporation(The business of Hong Kong and Shanghai Banking Corporation was transferred to the Mercantile Bank Ltd., on 1st October 1972.)

Hong Kong

1869

(4)

Chartered  Bank  of  India, Australia and China. 

London

1858

(5)

National Bank of India Ltd.

London

1863

(6)

Mercantile Bank of India Ltd.

London

1854

(7)

Bank of Taiwan

Taipeh (Formosa)

1917

(8)

Sumitono Bank

Japan

1916

(9)

Mitsui Bank

Tokyo

1924

(10)

The International Banking Corporation (absorbed by the National City  Bank of New York).

New York

1904

(11)

Netherland Trading Society

Holland

1920

(12)

National Vetrumariuo

Lisbon

N.A.

(13)

The Eastern Bank of India ..

London

1910

Foreign firms such as Thomas Cooks and Sons and Grindlays and Company also conducted a substantial amount of foreign exchange business though they were mainly trading and tourist agencies.

The number of foreign exchange banks in 1870 was only three and by 1919-21 they were 19. They had a lucrative business in India by that time, bothin relation to the financing of foreign trade as well as internal activities. They financed the foreign trade by issuing and purchasing the trade bills known as D.P. (documents on payment) and D. A. (documents on acceptance) bills. As the exchange rates between the Rupee and the Sterling fluctuated from time to time, there was risk involved in this business. But the exchange banks by the first quarter of the present century had established their position and prestige; and due to the large volume of their business, were able to withstand the risks. Of course, the forward exchange market provided the necessary support.

There were a number of criticisms levelled against these foreign banks which were visible in the evidence of the Indian members before the Babington Smith Committee and in the minority report of the Hilton Young Commission. The issuing of council bills and reverse council bills by the Government of India for supporting the exchange value of the Rupee was considered to provide a special help to the exchange banks. Even Sir Stanchy Reed stated before the Hilton Young Commission, "I hold the view rightly or wrongly that this practice of spoon-feeding the exchange banks has been demoralising to the exchange banks". The exchange banks, further invested their funds largely on the London money market and this deprived the Indian money market of the opportunity to develop further. They always protested against the proposal of allowing the presidency banks to participate in foreign exchange business or gain access to the London money market. They were against even the starting of the central bank for the development of the Indian money market. These points of complaint were less relevant by 1939, when already the Reserve Bank of India was established and the rate of exchange between the Rupee and the Sterling was fixed at the level of Rs. 1 = 1 s. 6 d.

Yet the Indian banks and Indian interests continued their criticism against the foreign exchange banks. The main two points were, firstly, the monopolistic position of these banks, and secondly, the discriminatory policies adopted by them. The Indian commercial banks, with their limited skill and resources were not able to compete with the powerful foreign banks and thus could not participate in financing of the foreign trade. The foreign banks also discriminated against Indian interests. They employed for the high position mostly their own nationals. They favoured their own shipping and insurance firms. Even the exports and imports of the country were largely carried out by the foreign firms, mainly British.

While the foreign exchange banks substantially helped the expansion of the foreign trade and bore the risk of fluctuating exchange rates; they were also able to earn good profits in their business in India. There were no restrictions or regulation or these banks till 1949, though the Indian commercial banks were regulated by the Indian Companies Act. There was always the demand from Indian banks for the control of foreign banks but no such legislation was enacted till after Independence.

The Second World War (1939-45) led to the imposition of foreign exchange controls by the Reserve Bank of India. Under the controls, exchange transactions could only be carried out by the authorised agents approved by the Reserve Bank of India and it acquired the powers of asking for information from the exchange banks about their transactions relating to India and the other countries with which the Indian branches of the exchange banks had their dealings. The rates of exchange between the Rupee and these currencies were fixed by Reserve Bank of India and the policies regarding these transactions were laid down by the Reserve Bank of India. The Reserve Bank of India acquired the surplus exchange resources arising from the export surplus of the country during the war period and a part of this was used for the repatriation of the foreign debt of the country. As a result of all these developments during the war period, Reserve Bank of India and the exchange banks came in contact with one another and a co-operative attitude developed between them. The Reserve Bank of India acquired more powers under the Indian Banking Companies Act of 1949, and under the Act, certain regulations were imposed on the functioning of the exchange banks.

Reserve Bank of India has the powers to impose strict regulations on the exchange banks if necessary and thus the foreign exchange banks are on par with the other Indian banks in the country.

Since Independence, the Indian banks have been extending their activities and have opened branches in various countries. By 1960, there were as many as 100 offices of Indian banks in foreign countries, though majority of them were in Pakistan. The main obstacle in the way of Indian banks taking up banking business in foreign countries has been the difficulty of opening branches and working them successfully. There are political and currency complications. A branch in a foreign country needs huge capital, great experience and prestige to attract funds. Yet the Indian banks are venturing abroad in various countries. Still they have not got a sufficient share in the financing of foreign trade, and the foreign exchange banks have the major share, in financing the foreign trade of the country.

With the changing structure and functions of the Indian commercial banks and the economic development of the country, certain trends are evident in the working of the foreign exchange banks. Their share in the financing of internal trade is very insignificant today. This can be accounted for by two factors. The volume of imports and exports of the country has increased at a very rapid rate, and though the Indian commercial banks are slowly extending their share in this field, the volume of business of exchange banks is large and increasing. The rates of exchange are now maintained at a fixed level and can be changed by the Government only after the approval of the International Monetary Fund. Thus the risks in financing of external trade are very low and the profits of the exchange banks are high. The tourist trade is expanding which again expands the transactions of the exchange banks.

Since 1950, and more so after 1956, a large number of collaboration agreements have been undertaken in the industrial sector, between the Indian and the foreign firms. These collaborating firms, would naturally bank with the banks of their own nation and thus have their accounts with these banks. They would also draw credit from these exchange banks and thus the business of the foreign exchange banks continued to expand. The credit controls are not all directly applicable to the foreign exchange banks, and as these banks are mostly concerned with those sectors which are accepted as the priority ones by the plans, the financial activities of the exchange banks have continued to expand. Their functioning is largely confined to, these definite sectors, and as with the other financial institutions, their business is also continually expanding.

The list of Foreign Exchange Banks functioning in Greater Bombay in 1980 (Directory of Bank Offices, December 1980, Reserve Bank of India) is given below:—


Foreign Exchange Bank

No. of Branch offices/ Administrative offices/ sub-offices

1.

American Express  International Banking Corporation.

Local Head Office.

2.

Bank of Oman

1 branch.

3.

Bank of Tokyo

1 branch.

4.

Banque National de Paris

2 branches.

5.

British Bank of the Middle East ..

1 branch.

6.

Chartered Bank

1 branch, 5 sub-branches. 1 administrative office.

7.

European Asian Bank

1 branch.

8.

Mercantile Bank

1 branch, 6 sub-offices.

9.

Mitsui Bank

1 branch.

10.

Nedungadi Bank

1 branch.

Information about some foreign exchange banks operating and having branches in the city of Bombay and their operations are described in the following paragraphs.

Mercantile Bank Limited (The name of the bank has been changed to Hong Kong and Shanghai Banking Corporation Since 1st January 1983) (Incorporated in England) : The Mercantile Bank Ltd. is one of the oldest British banks to have been established in the city of Bombay. It's first branch was established as early as in 1853 in the Fort area. It was mainly undertaking banking and exchange business of every description. Since then upto 1966, no new additional branch was opened, mainly for undertaking ordinary banking business. There were six branches of the bank in Greater Bombay in 1970 five of them being established since 1966. They were established as follows:—

(1) the branch at Tulsi Wadi, 1st March 1966, (2) the branch at Vile Parle (West), 14th October 1966, (3) the branch at Chembur, 15th March 1967, (4) the branch at Bandra, 28th August 1968, and (5) the branch at Andheri (East), 28th January 1969. As the separate information about the assets and liabilities of these branches in the city of Bombay is not available, an aggregate data of all the Indian branches of the bank is given.

The total liabilities and assets of the bank from 1967 to 1970 are given below:—

                                (Rs. in lakhs)                                           (Rs. in lakhs)


Year

Liabilities and Assets

Year

Liabilities and Assets

1967

43,29

1969

53,18

1968

55,23

1970

60,09

The entire business of the Hong Kong and Shanghai Banking Corporation in India was transferred to the Mercantile Bank Ltd. on 1st October 1972.

American Express International Banking Corporation : The date of establishment of the branch in Bombay is June 1, 1922. The nature of transactions as reported by the bank is ordinary banking business, discounting of foreign and indigenous bills, etc.

National and Grindlays Bank Limited : The first branch of the bank was established in Bombay in 1865 and upto the year 1972, the number of branches in Greater Bombay increased to 11.

Under the advances of the bank, Rs. 2,95 lakhs and Rs. 8 lakhs relate to the medium-term advances for which finance has been obtained, respectively from Industrial Development Bank of India and Agricultural Refinance Corporation.
                                (Rs. in lakhs)                                                       (Rs. in lakhs)


Year

Liabilities and assets (As on 31st December)

Year

Liabilities and assets (As on 31 st December)

1966

2,43,55

1969

2,79,27

1967

2,54,55

1970

3,55,59

1968

2,71,31

 

 

The data given in the following statement indicate the pattern of the advances by the Bombay branches of the Bank.
                                                                                                            (Rs. in'000)

Sector

1967

1969

No.of Accounts

Amount Rs.

No.of Accounts

Amount Rs.

Industry

225

22,35,58

267  

27,57,20

Commerce

393

12,59,58

485

1,64,600

Agriculture

4

1,75

2

4,39

Personal and professional

463

22,03

509

17,48

All others 

135

2,17,74

143  

1,97,74

Total

12,20

37,36,68

14,06

46,22,81

The bank's advances in Greater Bombay as above reflect not merely the policy of the Bank in relation to these advances but also the industrialised nature of the city. By 1969, as regards the number of accounts, the largest was under personal and professional viz; 509, but the amount of advances to industry was the highest which stood at Rs. 27.57 crores (accounts 267) in 1969; and to commerce at Rs. 16.46 crores (accounts 485). The advances to personal and professional sector were hardly Rs. 17 lakhs. As agriculture plays a very small role in the city, the number of accounts were only two and the advances under it amounted to about Rs. 4 lakhs. The commerce and industry which form the basic sectors in the city, account for the major part of the advances of the bank. The data reflect the fact that the largest amount of transactions were in terms of Sterling and U.S. Dollar. In 1971, the purchase and sale of Sterling were Rs. 102 lakhs and Rs. 164 lakhs, respectively and purchase and sale of U.S. Dollar were Rs. 110 lakhs and Rs. 58 lakhs, respectively. The transactions in other currencies viz. Canadian or Australian were relatively very small. The amount of deposits of the branches in Greater Bombay increased from Rs. 43,40 lakhs in 1967 to Rs. 61,45 lakhs in 1971 and the number of deposit accounts increased from 80,144 to 1,04,763 over the same period. Similarly, their business in relation to advances of loans to indigenous and foreign trade continually expanded over this period.

The largest number of accounts and the amount there under in the branches of the bank in Greater Bombay are under personal accounts. Out of 95,524 total number of accounts in March 1970, the total number of personal accounts stood at 87,910; whereas, the number of accounts in trading concerns stood at 3,965;and manufacturing, at 799. The amount outstanding on 31st March 1970 on personal account was Rs. 27,31 lakhs; while under manufacturing it was Rs. 4,78 lakhs. A large amount of personal deposits were in the fixed deposits and the savings accounts; while for the manufacturing and trading concerns, they were largely in savings and current accounts.

The first branch of the bank was established in the Fort area in 1865. Upto December 1975, the number of branches of the bank increased to 11. They are situated at Mandvi, Cumballa hill, Dadar, Byculla, Ghatkopar, Santacruz, Vile Parle, etc. These branches carry out all types of banking business, while the branches at Cumballa Hill, Dadar, Santacruz and Vile Parle, provide safe deposit locker facilities.

Mitsui Bank Limited {Incorporated in Japan with Limited Liability) : The bank has one branch office in India which was established on 28th May 1955 in Bombay. The bank is a scheduled ' A' class bank doing ordinary banking business such as deposits, foreign exchange, loans, etc. The following statement gives the profit and loss account of Bombay branch for the year ended 31st December.


Year

Expenditure
(Rs.)

Income
(Rs.)

1967

28,99,528.95

28,99,528.95

1968

26,34,097.33

26,34,097.33

1969

23,27,163.12

23,27,163.12

1970

23,78,371.50

23,78,371.50

First National City Bank : (Incorporated with limited liability in the U.S.A. and established in 1812).—The First National City Bank has three branches in the city of Bombay. The first branch was established in January 1904. The bank is mainly concerned with banking business and foreign exchange business. It's rate of interest for loans varies from 9 to 10 1/2 per cent. The prime consideration in sanctioning loans is the credit worthiness of the client and the viability of the project. The state­ment given below about the ownership of deposits as on 31st July 1970 indicates that the number of personal accounts of the bank were the largest as the same stood at 12,052 on July 31,1970. The next in importance in the number of accounts were business accounts and trading companies. The deposits of manufacturing concerns were higher in relation to other deposits.

(Rs. in thousands)

Particulars

Fixed Deposits

Current Accounts

Saving  Deposits

Total Deposits

No. of accounts

Amount

No. of accounts

Amount

No. of accounts

Amount

No. of accounts

Amount

Rs.

Rs.

Rs.

Rs.

Manufacturing concerns.

47

41,992.18

325

37,309.29

 

 

372

79,301.47

Trading companies

31

948.36

463

9,473.35

 

 

494

10,421.71

Personal

1,233

9,319.69

449

2,418.20

10,380

 20,255.53

12,062

31,993.42

Banking companies

.....

....

13

1,115.49

 

 

13

1,115.49

Business

19

18,735.78

77

10,813.35

 

 

96

29,549.13

Public institutions and trusts.

38

4,084.79

37

4,187.64

28

  293.93

103

8,566.36

Others

48

2,40,378.17

28

1,083.92

 

 

76

2,41,462.90

Total

1,416

3,15,458.97

1,392

66,401.24

10,408

 20,549.46

13,216

4,02,409.67

As regards the advances of the Bank, the largest amount was to industry, accounting for Rs. 207,594.23 thousands by August 7, 1970. The total advances on that date were Rs. 217,478.95 thousands and the number of total accounts stood at 764.

The data on advances according to securities in Greater Bombay indicates that all the advances were on the security of industrial raw materials and the same amounted to Rs. 154,294.60 thousands. The business of the Bank which was confined to the city of Bombay reflected two features. Firstly, a large number of accounts and transactions were in the category of personal transactions and they could be mostly in relation to the American citizens residing in the city. Secondly, the amount of advances to industries by Bombay branches was the highest on 7th August 1970 and that again could be in relation to the American industrial and business firms in the city, and their operations in the country.

Top

STATE-AID TO INDUSTRIES

The main object of industrial policy is to bring about a balanced and a rapid development of the country's industrial resources. This cannot be achieved if things are left entirely in the hands of private enterprises, because the paucity of capital, the shortage of industrial and capital goods, the lack of technical skill and the desire to have quick and sure returns are the obstacles in the way of private entrepreneurs. The State therefore has got an important role to play on this behalf. Financial assistance for creation of fixed assets and working capital is one of the important factors for the promotion of industries. The same is made available through the following institutions :—

 

Source

Financial Assistance

(1)

Directorate of Industries under the
State-Aid to Industries Act, 1960.

Working capital  and  fixed assets.

(2)

Maharashtra State Financial Corporation.

Working  capital  and  fixed assets.

(3)

State  Bank of India,  Commercial banks under the Reserve Bank of India guarantee scheme.

Working capital.

(4)

State Industrial and Investment Corporation of Maharashtra (SICOM).

Share capital participation.

(5)

Maharashtra Small Scale Industries Development  Corporation Ltd., (MSSIDC).

Share capital participation.
                               

Besides, large scale industrial units get financial assistance from the Industrial Development Bank and the Industrial Credit and Investment Corporation of India, The Directorate. of Industries, however, is not associated with any of the formalities for financing large scale industrial units through these two organisations. The Directorate of Industries renders financial assistance under the State-Aid to Industries Act, 1960 and furnishes technical scrutiny report in the case of applications consi­dered by the Maharashtra State Financial Corporation and the State Bank of India. The Directorate of Industries is indirectly associated with processing of applications of medium scale industries sponsored by the State Industrial and Investment Corporation of Maharashtra and small scale industries sponsored by the Maharashtra Small Scale Industries Development Corporation.

The rate of interest charged differs so as to give special treatment to small entrepreneurs and to those from the underdeveloped regions. This is one of the incentives offered by the State Government for dispersal of industrial growth and preventing over-concentration of industries in the Bombay-Thane industrial complex. The Deputy Director of Industries, Bombay region, operates the scheme for financing small and cottage indus­tries in Greater Bombay and grants loans upto Rs, 3,000. The details of loans granted under State-aid to Industries Rules, 1961, to the cottage and small scale industries in Greater Bombay area by different agencies are given in the following statement :—

 

1967-68

1968-69

1969-70

1970-71

Name of Agency Units Amount (Rs.) Unit Amount (rs.) Unit Amount (Rs) Unit Amount (Rs)

Maharashtra  State Financial Corpora­tion.

14

6,62,000

9

4,81,000  

14

5,63,000

 ..

7,63,657

Bank of Maharashtra

1

8,000

11

72,400  

 9

72,200

 15

85,000

The Deputy Director of   Industries, Bombay,

20

28,300

26

35,750  

14

20,000

 15

24,000

The two important schemes implemented by the Directorate of Industries, Government of Maharashtra, Bombay, in the last few years are (i) Employment Promotion Programme, and (ii) Export Promotion, the details of which are given in the following few paras.

(i) Employment Promotion Programme : Under this programme, the scheme of seed money assistance to educated unemployed is implemented. During 1973-74, the Government of India launched a programme to assist the educated unemployed young men to be self-employed in small industries, service industries or business enterprises. The scheme is implemented by the Industries Commissioner through different develop­ment corporations within their jurisdiction. The main objective of the scheme is to encourage new types of small ventures including trading activities for full utilisation of locally available raw material, indigenously developed know-how, local skills and talents. However, as the class of entrepreneurs is being initiated for the first time to venture into small industrial or business enterprise, it may not be always possible to provide margin money for a bankable proposal. Usually, the financing institutions stipulate upto 30per cent of the total cost of the project, including working capital finance. The scheme for seed money assistance envisages filling up the gap of margin money to the extent of 10 per cent of the project cost and in very exceptional cases upto 15 per cent at a low rate of interest of 4 per cent per annum and a long moratorium for repayment.

Entrepreneurs are expected to seek financial assistance from the institutional sources, i.e., the nationalised banks, Maharashtra State Financial Corporation, etc. The main feature of the scheme apart from seed money assistance is to provide co-ordinated assistance by regional development corporations right from the stage of selection of the business or production opportunity upto the point the project goes into operations.

Assistance of seed money is available to proprietary units, partnership concerns, private limited companies or co-operative housing societies, with majority share holding by eligible persons without any further dilution of holding by those who do not belong to this category. In the case of manufacturing units, dilution of equity is permitted only if the educated unemployed are in majority.The equity held by them should at least be 76 per cent of the total equity, for getting an assistance of seed money. In such case, the seed money is sanctioned upto Rs. 30,000. Besides, all the educated unemployed partners are expected to take active part in the enterprise. Assistance of seed money is given only at the start of the project both for fixed and working capital as evaluated by the financing agency.

The repayment of loan given as seed money for fixed assets commences only after the entrepreneur's obligation has been fully met or after eight years, whichever is earlier. The repayment is generally spread over a period of four years after the period of moratorium. The first instalment commences six months after the expiry of moratorium comprising of the accumulated interest followed by equated six-monthly instalments of principal with interest. In Greater Bombay area, the scheme is implemented by the Industries Commissioner, Bombay, through the Maharashtra Small Scale Industries Development Corporation and the Khadi and Village Industries Board.

The assistance  for  self-employment  is  given  for  the following activities :—

  1. Small industries and services institutes
  2. Agro-service centres
  3. ,Animal husbandry, dairy, poultry, piggery, fisheries, etc.
  4. Retail shops for sales and services, especially those relating to goods coming under the public distribution system, organisation of co-operatives for marketing goods, agencies and services of hotels and motels, etc.
  5. Transport, and
  6. Medical practitioners at places with a population not exceeding 50,000.

The expenditure on this scheme in Greater Bombay since its inception was as under:—


Year

Units

Amount in lakhs (Rs.)

1972-73

5

0.13

1973-74

48

3.02

1974-75

29

3.08

1975-76

266

8.17

1976-77

108

3.00

Total

456

17.40

 (ii) Export Promotion Activities : An export promotion wing headed by the Director of Export Promotion, who is also the Member-secretary of the State Board for Export Promotion, has been constituted within the Directorate of Industries, to act as the secretariat cell of the Board, standing committee, and the seven commodity panels under the Board for export promotion and to perform all other executive functions relating to export promotion.

The Export Promotion Cell in the Directorate of Industries recommends deserving cases for preferential treatment to various organisations in the matter of procuring of land, water, power, raw materials, machinery, etc. It also makes arrangements to disseminate information to interested exporters and helps them in the display of their products in the selected international trade fairs and exhibitions. It also assigns to reputed concerns or organisations the work of conducting export potential surveys of selected products and commodities. Of late, in view of the tremendous potential, efforts are concentrated in the countries in the Middle East.

The export promotion wing in the Directorate makes special efforts to assist the exporters by taking up their genuine difficulties both with the State Government as also with the Central Government. This pertains to items like custom duty problems, refund of excise duty, exenijption from payment of octroi duties, etc.

Recommendations of the panels are screened by the committee of the Chairmen of the panels presided over by the Secretary of Industries, Energy and Labour Department, Government of Maharashtra, and important recommendations involving general issues and policies are placed before the Board for consideration. Actions or other recommen­dations of the panels, relatively less in importance and of an individual nature are initiated by the Export Promotion wing without reference to the Board.

Important recommendations of the Board involving major policy deci­sions on the part of the State Government are placed before the Industries sub-committee of the High Power Committee of the State Cabinet.

Besides the export promotional activities of the Directorate of Industries, the following State Government agencies in Bombay, are engaged in commercial exports of products coming under their respective purview:—


Agency

Products

MAFCO Limited

Frozen buffalo meat, fresh and frozen vegetables, bananas, mangoes, peas and fish.

Maharashtra Agro-Industries Development Corporation Limited.

Canned  and bottled  fruit juice, pulp and squashes.

Maharashtra Small  Scale Industries  Development Corporation Limited.

All items of small scale industries.

Maharashtra State Oil Seeds Commercial and Industrial Corporation Limited.

Cotton seed, cakes and extraction.

Maharashtra Fisheries Development Corporation Limited.

Frozen  sea  food,  prawns  and lobster tails in cans and frozen fish.

Maharashtra State Powerloom Corporation Limited.

Powerloom cloth.

Maharashtra State Textile  Corporation Limited.

Cotton textiles.

Maharashtra State Co-operative Marketing Federation Limited.

Cotton bales.

Development Corporation of Konkan Limited.

Mangoes.

A sum of Rs.5 lakhs was placed at the disposal of the Maharashtra Small Scale Industries Development Corporation Limited as agency of the State Government for solving the difficulties of warehousing faced by upcountry exporters. The Corporation has already constructed a warehouse at Sewri wherein an area of 929 square metres is earmarked for exporters. In addition, another warehouse in Cotton Green area admeasuring 6,967.72 sq. metres has been acquired by the Corporation from Bombay Port Trust and the warehouse would be available to exporters for storage and repacking. These facilities are proposed to be expanded in a phased programme depending on the demand and availability of funds.

As a measure of encouragement, the Government of Maharashtra annually distributes awards in the form of silver plaques to the best exporters. The scheme covers large scale, small scale entrepreneurs and merchants in the State.

Top

STATE-SPONSORED FINANCIAL INSTITUTIONS

Maharashtra State Financial Corporation : Various State Financial Corporations have been established in pursuance of the State Financial Corporations Act, 1951 for catering to the financial requirements of small and medium sized industries. The Maharashtra State Financial Corporation (MSFC) was established in 1953 as the then Bombay State Financial Corporation and was reconstituted under Section 70 of the Bombay Re-organisation Act, 1960. Accordingly, its name was changed to Maharashtra State Financial Corporation.

The Corporation considers applications for loans of Rs.10,000 to Rs. 10,00,000 from proprietary concerns, partnership concerns without minors and private limited companies. However, in the case of public limited companies and registered co-operative societies, the Corporation is empowered to consider applications upto Rs. 20 lakhs.

In order to assist particularly the small scale industries, the Maharashtra " State Government has entered into an agency-cum-guarantee agreement with the Corporation under which loans from Rs. 10,000 to Rs. 75,000 and in exceptional cases upto Rs. 1 lakh are granted by; the Corporation on liberalised terms. The Government also gives guarantee in each of these loans. Loans above Rs. 1 lakh are considered by the Corporation under its own rules.
A list of industrywise loan applications sanctioned by the Corporation during 1979-80 in Greater Bombay district is given below:—


Sr. No.

Type of Industry

Applications sanctioned

No.

Amount (Rs. in lakhs)

1.

Mining and quarrying 

 

....

2.

Food mfg. industry except beverages

1

29.30

3.

Mfg. of Textiles

15

57.91

4.

Mfg. of footwear and other wearing apparels and made up textile goods

2

2.34

5.

Mfg.  of wood and cork except mfg.  of furniture

2

0.86

6.

Mfg. of furniture and fixtures

 

 

7.

Mfg. of paper and paper products

3

3.33

8.

Printing, publishing and allied industries

13

35.04

9.

Mfg. of leather and leather products

2

5.88

10.

Mfg. of rubber products

1

3.18

11.

Mfg. of chemicals and chemical products  

9

25.67

12.

Mfg. of products of petroleum and coal

1

20.00

13.

Mfg. of non-metallic mineral products

1

5.50

14.

Basic metal industries

3

26.37

15.

Mfg. of metal products except machinery and transport equipment

20

53.70

16.

Mfg. of machinery except electrical machinery

7

26.32

17.

Mfg. of electrical machinery, apparatus and appliances

5

17.97

18.

Mfg. of transport equipment

 

....

19.

Miscellaneous mfg. industries

16

70.35

20.

Electricity, gas, steam and sanitary services

 

 

21.

Hotel Industry

6

31.45

22.

Transport industry

 

 

 

(a) Road transport

13

5.90

 

(b) Water transport

2

0.64

23.

Beverages industry

....

....

24.

Industrial estates

....

....

25.

Motion picture and distribution

....

 

 

Total

122

4,21.71

Note : Mfg.= Manufacturing

Total number of cases sanctioned by the Corporation in Greater Bombay District are given in the following statement:—

Year

Number

Amount
(Rs. in lakhs)

1964-65

126

1,95.45

1965-66

63

1,06.27

1966-67

66

1,64.87

1967-68

37

1,18.34

1968-69

59

1,37.92

1969-70

120

2,09.26

1970-71

142

1,95.65

1971-72

131

2,47.68

1979-80

122

4,21.71

During 1979-80, the actual amount disbursed by the Corporation amounted to Rs. 2,72.36 lakhs.

Industrial Development Bank of India : The Industrial Development Bank of India (IDBI) was set up with its headquarters in Bombay in July 1964 as a wholly owned subsidiary of the Reserve Bank of India in terms of the Iiidustnal Development Bank of India Act, 1964, for providing credit and other facilities for the development of industry and for matters connected therewith The various activities of the Bank include (i) direct assistance td industry in the form of loans, under­writing of shares and debentures, guarantee for loans and deferred payments ; (ii) refinance of industrial term loans granted by Commercial and State Co-operative Banks, State Financial Corporations and other term financing institutions ; (iii) rediscounting of usance bills, promissory notes arising out of sales of indigenous machinery ; (iv) refinance of export credits and direct loans and guarantees in participation with commercial banks in respect of exports; (v) subscription of the shares and bonds of State Financial Corporations and other term financing institutions; (vi) promotional activities such as marketing and investment research and techno-economic studies; and (vii) co-ordinating the activities of other term-financing institutions.

Thus the Bank has been designed and empowered to function, not merely as a financing institution, but a central co-ordinating agency, which ultimately is concerned directly or indirectly with all problems relating to the long and medium term financing industrial growth.

The minimum amount of loan that is normally refinanced is Rs. 2 lakhs which is relaxed in the case of projects already assisted under the scheme; in the case of loans to small scale industries guaranteed under the Central Government's Credit Guarantee Scheme and to small road transport operators, the minimum limit has been fixed at Rs. 10,000 and Rs. 20,000, respectively.

The minimum period of loans so to be eligible for refinance is of 3 years. The maximum period in respect of loans given by Commercial and State Co-operative Banks is upto 10 years and upto 25 years in the case of term-lending institutions.

It normally refinances upto 80 per cent of the eligible loans. But in the case of loans to small scale units covered under the Credit Guarantee Scheme, loans upto Rs. 20 lakhs to small and medium sized projects, in specified backward areas and loans upto Rs. 5 lakhs in other cases, refinance is provided upto 100 per cent.

The normal rates of interest for refinance of industrial loans are 6.75 per cent and 7.00 per cent where the ceilings on the rates to be charged by the financial institutions are 10.25 per cent and 10.50 per cent, respectively. In the case of refinance of loans to small scale units, which are covered under the Credit Guarantee Scheme, a concessional rate of 5 per cent is charged, provided the lending institution itself charges not more than 8.50 per cent per annum. Recently, the rate has been reduced to 3 1/2 per cent in respect of loans upto Rs. 20 lakhs granted to small and medium sized projects in specified backward areas, provided the primary lender does not charge an effective rate exceeding 7 per cent.

The following statement reveals the statistical information of financial assistance sanctioned and disbursed by the bank to industrial units located in Greater Bombay since its inception upto 30th June 1973 :—


Particulars

 

Loans

Underwriting

Loans for export.

Guarantee for export

No, of
Units

Amount

No. of
Units

Amount

No. of
Units

Amount

No. of
Units

Amount

 

(Rs.)

 

(Rs.)

 

(Rs.)

 

(Rs.)

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

Assistance sanctioned

8

7,22.80

6

2,53.78

8

17,14.12

1

1,80.14

Assistance  disbursed

3

2,07.80

5

46.33

7

8,85.18

1

1,79.19

During the period 1979-80 the Bank sanctioned a loan amounting to Rs. 26.14,47 lakhs to 20 industrial units located in Greater Bombay. The schemewise loans distributed during 1979-80 were as under :—


Scheme

No. of units

Amount sanctioned
(Rs. in lakhs)

Soft loans

10

2,181

Technical development

8

3,25.60

Project loans 

1

1,05

Underwriting debentures  

1

2.87

Industrial Credit and Investment Corporation of India Ltd. :  The Corporation (ICICI) is a financial institution which was established on 5th January 1955, to encourage and assist industrial investment in the country.

In pursuit of its objective of promoting private industrial investment, the Corporation grants financial assistance for various purposes including purchase of capital assets in the form of land, buildings, machinery, etc. It underwrites public and private issues and offers sale of industrial securities, ordinary shares, preference shares, debentures and debenture stock. The Corporation makes direct subscriptions to such securities The Corporation makes similar loans in foreign currencies for payment of imported capital equipment and technical services. It also guarantees payments for credits made by others.

Since its inception upto December 31st 1972, the Corporation sanctioned assistance amounting to Rs. 62,49; 30 lakhs to 144 companies in Greater , Bombay for their 230 projects.

Industrial Finance Corporation of India : The Corporation was established in 1948 under the Act of the Indian Parliament with the object of providing medium and long term credits to industrial concerns in India, particularly in circumstances where normal banking accommodation is inappropriate or recourse to capital issue methods is impracticable.

Fifty per cent of the paid-up capital now standing at Rs. 10 crores is held by the Industrial Development Bank of India, which is a wholly owned subsidiary of the Reserve Bank of India. The remaining 50 per cent is held by the scheduled banks, co-operative banks, insurance concerns and investment trusts, etc.

The main sources of funds of the Corporation other than its own capital include repayment of loans, borrowings from the market by issue of bonds, loans from the Central Government, foreign credits, etc.

The following statement reveals the progress made by the Corporation in assisting the industrial growth of Bombay.

(Rs. in lakhs)


Year

No. of
concerns assisted

Total cost
of these
projects
(Rs.)

Facilities
sanctioned by the corporation

Net
amount
sanctioned

Amount disbursed upto 30th September (Rs.) 1973 (Rs.)

(1)

(2)

(3)

(4)

(5)

(6)

1968-69

3

3,69.31

Rupee loan,  foreign currency loan, under­writing of shares.

78.60

36.75

1969-70

2

11.00

Rupee loan, foreign currency.

7.58

7.57

1970-71

3

2,01.46

Rupee loan, direct sub­scription,  foreign currency.

1,12.13

95.01

1971-72

2

10,51.00

Rupee loan, underwriting.

28.00

6.27

1972-73

4

14,63.88

Rupee  loan, foreign currency, underwriting of debentures.

1,36.67

9.57

The rate of interest charged continued to be 8.5 per cent per annum on rupee loans, 9 per cent on sub-loans in foreign currencies and 7 per cent per annum subject to certain conditions on rupee loans for projects located in the less developed districts.

National Industrial Development Corporation: The Corporation, with its headquarters at New Delhi, renders consultancy engineering services by way of detailed design and erection of complete projects and prepa­ration of detailed project reports. It is specialised in engineering industries, pulp and paper, electronics, metallurgical and ore handling projects.The services of the Corporation are being used by the Central Government, various State Governments, public sector enterprises and private entrepreneurs in India.

Upto 1972-73, 5 companies located in Greater Bombay were assisted by the Corporation. The total loan sanctioned to these companies amounted to Rs. 2,30.36 lakhs. Of the 5 companies, which received assistance, 4 were textile mills and one engineering unit.

Maharashtra Small Scale Industries Development Corporation Limited: The Corporation was established on 19th October 1962 to promote and finance small industries. It also provides machinery, equipment, technical and managerial assistance to small scale industries. It has started a number of activities so to emerge as a multi-service agency for the small scale sector.

The Corporation started its active career in 1963 with the programme of procurement and distribution of raw materials. The raw materials supplied by the Corporation fall under three categories, viz. ferrous metals, non-ferrous metals and chemicals.

The scheme of supply of machinery on hire purchase basis is imple­mented by the Corporation since the beginning of 1964. During 1970-71, the Corporation supplied 36 machines worth Rs. 1.80 lakhs to 14 units in Bombay. The number of units as also the number of machines supplied to these units by the Corporation showed an increase during 1971-72, as the same stood at 26 and 72 respectively. The value of machinery provided to 26 units in Bombay during 1971-72 amounted to Rs. 9.07 lakhs.

The Corporation has continued to function as handling and drumming agents for State Trading Corporation for mutton tallow received at Bombay Port.

The Corporation started its import activity in 1967-68 with a view to assist small units. After the change in the import policy of Government of India, the Corporation has started collecting release orders issued by the State Trading Corporation and other agencies.

Top

SMALL SAVINGS

The Government of India established Savings Banks in Presidency towns as early as in 1833. Their management was transferred to the Presidency Banks in 1865 and they were extended to other towns of the country. From 1896, these Savings Banks were managed by postal department and all accounts were treated as at call as in ordinary banking. No special reserves were maintained against these deposits. This money constituted the unfounded debt and was a floating charge on the credit of the Government. The rate of interest was relatively low, at 2 per cent in 1936 and hence did not attract large deposits from the general public.The small savings movement got an impetus during World War II, and there has been further marked progress due to the efforts and schemes made for the mobilisation of small savings since 1950.

The net collection of small savings is shared between the Central and State Governments since 1952, on an agreed formula which has undergone several changes since then. In June 1958, the formula was revised and the States were to retain their entire market borrowings and in addition receive two-third of the net collection from small savings in their respective areas.

The small savings schemes are getting popularity among the poor as well as the affluent class of society. This is due to the fact that Government have introduced various schemes to suit the requirements of individuals, groups, people with low income as well as tax-payers.

Most of the small savings schemes are worked through post-offices, and the number of branches of post offices are more in number than the branches of scheduled banks. Besides, a poor man visits the post-office very often and therefore finds it more convenient to deal with post-office than with sophisticated banks.

The schemes with income-tax concessions are mainly meant for the higher strata of society. In 1984-85, the following small savings schemes were in operation :—

(i) Post-Office Savings Bank Account; (ii) Cumulative Time Deposit Account; (iii) Recurring Deposit Account; (iv) Time Deposit Account; (v) National Savings Certificates and (vi) Public Provident Fund Account. The total target and achievement in all these schemes and accounts in Greater Bombay from 1974-75 to 1976-77 and 1984-85 are shown below :—

(Rs. in lakhs)


Year

Small Savings target

Achievement

Gross

Net

1974-75

27,00 00

47,64.99

—(46.39)

1975-76

22,0000

64,46.87

+(10,87.17)

1976-77

16,50.00

77,42.70

+(20,71.03)

1984-85

N.A.

76,983.23

+(38,214.73)

Post-Office Saving Bank: The post-office savings scheme came into force by theenactment of Government Savings Bank Act, (Source,—Post-Office Small Savings Schemes, Part I, A. N. Dureja, 1984.) 1873(5 of 1873). The same was afterwards amended by Savings Banks Amendment Act, 1959. The Post-Office Savings Bank constitutes a source for the collection of small savings especially from the people with meagre earnings.

This is the largest and the oldest savings institution and plays an important role in mopping up savings which are utilised for national development. As per the Post-Office Savings Bank General Rules, 1981, any person is eligible to open his account with a deposit of not less than Rs, 5 in any post-office either sub-post-office, branch post-office or head post-office functioning as a post-office savings bank.

The depositor receives interest at the rate of 5.5 per cent per annum (1984). No interest is allowed on any sum in excess of Rs. 25,000 in a single account or Rs. 50,000 in a joint account. The interest received by the depositor from the account is free from income tax. During 1958-59, the net collection in Greater Bombay under the scheme amounted to Rs. 20,000 which increased to Rs. 1,17,57,000 during 1960-61 and to Rs. 5,79,16,000 during 1965-66.

The collections under the scheme in Greater Bombay during 1975-76 and 1976-77 are given below :—

(Rs. in lakhs)


Particulars

1975-76

1976-77

(1)

No. of accounts

25,670

9,77,07

(2)

No. of accounts opened during the year--

 

 

 

(a) target

55,000

80,000

 

(b)achievement

1,72,037

22,360

(3)

Collection--

 

 

 

(a) target

8,81.00

8.80.00

 

(b) achievement--

 

 

 

 (i) gross   

9,97.35

11,62.26

 

 (ii) net   

4,18.97

95.99

The gross collection during 1984-85 was Rs. 48,76.16 lakhs, while the net collection amounted to Rs. 63.32 lakhs.

National Savings Certificates : The National Savings Certificates are issued according to Government Savings Certificates Act, 1959. At present, the Act is applicable to the 7 - Year National Savings Certificates of 2nd , 3rd, 4th and 5th issues and the National Savings Annuity Certificates.

The 7-Year National Savings Certificates 2nd , 3rd and 4th issues came in force on 16th March 1970 vide Post-Office Savings Certificates Rules, 1960 whereas the certificates of Vth issue came in force in 1974.

The salient features of the 7-Year and 6-Year National Savings Certificates are shown in the Table No. 6.

TABLE No. 6


Serial No.

Salient feature

7-Year

6-Year

II ISSUE

VI ISSUE

VII ISSUE

1

Date of introduction

16th March 1970

1st May 1981

1st May 1981

2

Denominations

Rs. 10, 50, 100, 500, 1,000 and 5,000

Rs.10, 50, 100, 500, 1,000,5,000 and 10,000.

Rs. 100, 500, 1,000, 5,000 and 10,000

3

Period of maturity

 7 Years

6 Years.

6 Years.

4

Surrender value for a Certificate of Rs. 100 Denomination at Maturity

Rs.155.50

Rs.201.50.

Rs. 100

5

Rate of interest 

6-5 per cent (Compound)

12 per cent (Compound half yearly)

12 per cent (Payable six monthly)

6

Tax concession on interest

Interest-free of Income Tax

Interest-free of Income tax  upto Rs.7,000 a year  inclusive of interest on other speci­fied investments.  The tax is not deducted at source.

As for VI Issue.

7

 Lock up period (period of non-encashability)

3 Years

3 Years.

3 Years.

8

Limit of holdings

Rs.75,000 for single investor (adult or minor) Rs. 1.5 lakhs for joint holders. This Limit includes all holding in the earlier issues of certificates  as  per  details given in Rule 7.

No limit

No limit

9

 Exchange with prize bonds

Not permitted

Not permitted

Not permitted

10

 Purchase of surrender of savings Stamps

Allowed

Not allowed

Not allowed

11

 Exchange with Gift Coupons

Allowed excepting Gift coupons of Rs.5 which can be exchanged only for cash.

Not permitted

Not permitted

12

 Partial discharge

Allowed after the lock-up period.

Not permitted

Not permitted

13

 Pledging as security

Allowed

Allowed

Allowed

14

 Conversion from one denomination to another

Allowed

Allowed

Allowed

15

 Purchase by Non-resident Indians

Not allowed

Allowed

Allowed

The 6-Year National Savings Certificates (VI and VII issues) were introduced on 1st May 1981.

The gross and net collections under the 7-Year and 6-Year National Savings Certificates (The III issue was discontinued in December 1980, while the IV and V issues in April 1981) in Greater Bombay in 1984-85 were as follows:—

(Rs. in lakhs)


Particulars

1984-85

(A) 7-Year National Savings Certificates :—

 

(1) IInd Issue—

 

                (a) gross

164.55

                (b) net

—83.69

(B) 6-Year National Savings Certificates :—

 

(1) VIth Issue—

 

                (a) gross

23,426.94

                (b) net

23,334.64

(2) VIIth Issue

 

                (a) gross

4,327.22

                (b) net

4,231.74

Post-Office Time Deposits : The scheme came into force from 16th March 1970 vide Post-Office (Time Deposit) Rules, 1970. It is governed by the Post-Office Savings Bank Rules, 1965.

The time-deposit accounts are of four types, viz., 1-year account, 2-year account, 3-year account and 5-year account. Any person is eligible to open an account but the persons may apply to the post-office together with the amount of deposit which should be in integral multiples of Rs.50. Every time deposit is made in cash or by crossed cheque drawn in favour of the depositor or the Postmaster. The repayment of time-deposit is made only on the production of the pass book accompanied by an application.

The rate of interest paid to the depositor varies according to the period of time-deposit and is 9 per cent for 1-year deposit, 9.75 per cent for 2-year and 10.5 per cent for 3-year deposit and 11.5 per cent for 5-year deposit.

The interest is paid annually and is subject to income tax. The deposits in 2-year, 3-year and 5-year time-deposit accounts can be accepted through authorised agents under the standardised agency scheme.

During 1970-71, the gross and the net collections in the above-stated time-deposits in Greater Bombay were the same, and amounted to Rs. 35,36,26,000. The following statement gives gross and net collections under the scheme in Greater Bombay since 1974-75 :—

(Rs. in lakhs)


Year

Gross collection

Net collection

1974-75

82,83.08

75,22.36

1975-76

1,15,15.33

83,01.02

1976-77

52,37.57

41,33 06

1984-85

4,17,59.95

1,09,59.00

Protected Savings Scheme : The scheme was introduced vide Rule 10A of Post-Office Savings Banks (C.T.D.) Rules, 1959 and Rule 11A of Post-Office Recurring Deposits Rules, 1970. The objective of the protected savings scheme is to promote regular savings of small savers, to provide an insurance cover in case of death of the depositor without any additional charge of premium, etc. in case of 5-year cumulative time deposit or recurring deposit accounts of Rs. 5, 10, 15 and 20 denominations opened on or after 1st July 1972. The accounts opened earlier but current on this date are also eligible. Since the 5-year and 15-year C.T.D. accounts have been discontinued with effect from 1st November 1973, only the existing 10-year C.T.D. accounts are covered by this scheme. In respect of accounts of Rs. 15 and Rs. 20 denominations, the benefit is available from 2nd June 1975 onwards.

The rate of compound interest at maturity in the case of recurring deposit account is 9.25 per cent per annum. In the recurring deposit account the depositor gets income-tax-free interest upto Rs. 3,000 a year and wealth tax exemption on deposits up to Rs. 1.5 lakhs of interest, while in 5-year C.T.D. account, the depositor gets whole income-tax-free interest upto Rs. 3,000 a year and complete tax exemption in addition to general limit of Rs. 1.5 lakhs.

Cumulative Time Deposits : The scheme came into force on 2nd January 1959 vide Post-office Savings Banks (C.T.D.) Rules, 1959. The object of the scheme is to enable depositors to provide for specific purpose by means of periodical deposits repayable in a lump sum inclusive of interest at the end of a specified period. Under this Scheme, deposits of Rs. 5 or any multiples thereof but not exceeding Rs. 1,000 for a period of 10 years can be opened. The maximum limit of total deposits in all the CTD accounts held by depositor during the entire period of accounts changes from time to time, the same from 1st February 1975 being 1,20,000 in case of single account and double the amount in joint account.

The amount of interest earned on deposits in C.T.D. accounts is exempted from income-tax. The deposits are also exempted from wealth tax. The deposits under 10-year accounts are entitled for rebate of income-tax subject to prescribed limits. The 10-year accounts opened on or after 1st October 1979 are eligible for 6.75 per cent compound interest.

The net collection under the C.T.D. scheme in 1958-59 in Greater Bombay stood at Rs. 3,10,000 which increased to Rs. 6,00,000 during 1960-61, and to Rs. 74,14,000 during 1970-71 and to Rs. 75,16,000 in 1975.

The following statement gives statistics regarding number of accounts opened and amount collected under the scheme in Greater Bombay :—

 

Particular

1975

1976

(1)

Number of accounts as on 1st April

1,539

14,004

(2)

Number of accounts opened in 1976-77—

 

 

 

(a) Target

7,500

15,000

 

(b) Achievement

2,465

4,827

(3)

Collection (in thousand Rs.)—

 

 

 

(a) Target

2,20.00

2,50.00

 

(b) Gross

2,26.95

2,55.22

 

(c) Net

75.16

67.34

The gross and net collections in 1984-85 amounted to Rs. 9,55.60 lakhs and Rs. 5,07.15 lakhs, respectively.

Recurring Deposits Scheme: The scheme of Post Office recurring deposits (R.D.) came into force on 1st of April 1970 vide Post Office Recurring Deposits Rules, 1970. Under this scheme, only one type of account viz. 5-year account with a denomination of Rs. 5 or any multiple thereof can be opened.

The deposits opened after 1st March 1983 are eligible for 11.50 percent compound interest per year. One withdrawal not exceeding 50 per cent of the deposits is allowed after one year.

During 1970-71, the total number of such accounts was 10,018 with net collection of Rs. 5,09,000. The number of accounts increased to 1,16,173 in 1975 and to 1,71,406 in 1976. The number of new accounts opened under the scheme in 1975-76 and 1976-77 were 55,233 and 85,312, respec­tively and the gross collection under the total number of accounts during the said period amounted to Rs. 1,73 lakhs and Rs. 2,71.23 lakhs, respectively. During 1984-85, the net collection amounted to Rs. 7,78.37 lakhs.

Sanchayika Savings Scheme: Sanchayika is a savings bank run by school-going children for themselves. The scheme was started in 1965 with a basic idea to inculcate the habit of thrift in the minds of children as also to make them aware of the benefits of savings and its role in the economic development of the country. The scheme is entirely operated by the school authorities themselves. A school savings bank, called as Sanchayika opens a single savings account in the name of the school.

The Sanchayika accounts with effect from 1st November 1979, earn interest at 5.5 per cent from the Post Office savings bank. The progress of the scheme in Greater Bombay is shown in the following statement:—

 

Particulars

1975-76

1984-85

(1)

Number of Sanchayikas as on 1st April

166

59

(2)

Number of membership

20,165

28,431

(3)

Collection in the year (Rs. in lakhs)

5.69

14.58

(4)

New Sanchayika formed during the year

30

59

(5)

Collection during the year (Rs. in lakhs)—

 

 

 

(i) Target

0.75

N.A.

 

(ii) Achievement

0.22

14.58

Small Savings Agencies: A number of small savings agencies are functioning in order to promote and popularise small savings schemes. The number of total agents on the roll as on 1st April 1976 was 988 and the total collections made through them amounted to Rs. 13,10.79 lakhs during 1976-77. During 1984-85, the number of agents increased to 7,712 and the total collections of all agents amounted to Rs. 2,79,43.82 lakhs. The following savings organisations and agencies are working at present (1984).

  1. National Savings Organisation : It is working under the Ministry of Finance, Government of India.
  2. Standardised Agency System: The system was introduced with effect from 1st October 1960. Under this system, authorised agents are appointed by the respective State Government authorities. These agents canvass for the sale of National Savings Certificates, Social Security Certificates and Time Deposit Accounts. They are entitled for a commission of 2 per cent with effect from 1st July 1976 for the investments in the securities.
  3. Manila Pradhan Kshetriya Bachat Yojana: The scheme was intro­duced from 1st April 1972 with a view to encourage habit of thrift (among the households), to popularise C. T. D. and R. D. accounts and to raise resources for the. development plans. The area savings leaders axe authorised to Secure collections every month from, the households in C.T.D. and R.D. accounts. The area savings leader claims commission for: all ihe deposits made through him at the rate of 4 per cent with effect from 1st July 1976. The agents issue printed receipts to the depositors for the monthly deposits collected from them and deposits the amount collected at the post office. The area savings leader is attached to one post office and is given area of about 1,000 households.

The agents are of two types viz., institutional agents appointed through the National Savings Organisation and individual agents.

The agency is given to a woman either on a security of Rs. 100 or on fidelity guarantee. The number of Mahila agents as on 1st April 1975 was 83 which increased to 1168 on 1st April 1984. These agents operated 3219 C.T.D. and R.D. accounts up to 1st April 1975 which increased to 13697 accounts up to 1st April 1984. The collections under both the accounts in 1975-76 and 1984-85 amounted to Rs. 4.15 lakhs and Rs. 376.35 lakhs, respectively.
The total incentives given to these agents during 1984-85 amounted to Rs. 2.61 lakhs.

(4) Pay Roll Savings Scheme : The scheme was introduced in August 1959 with an object of promoting voluntary savings of the employees and wage earners in the private sector and was extended to Government offices in May 1962. Under this scheme an amount is deducted from the salary or wage bills of the employees every month and deposited in the post-office. The scheme is applicable to C.T.D., R.D., 2/3/5-Year T.D. accounts, 7-Year National Savings Certificates (Ilnd issue) and 10-Year Social Security Certificates.

The group leader is entitled to the reimbursement charges at the rate of 2.5 per cent with effect from 1st July 1976 for this work. Number of groups as on 1st April 1975 stood at 899, and the number increased to 1020 up to 1st April 1984.

The following statement gives statistics regarding the scheme in Greater Bombay for 1975-76 and 1984-85:—

 

Pay Roll Sayings Group

1975-76

1984-85

(1)

Number of groups as on 1st April 1975 and 1984

8,99

1,605

(2)

Membership in old groups

1,42,328

8,46,566

(3)

Collections in old groups (Rs. in lakhs)

2,91.27

11,87.55

(4)

New groups formed in the year 

121

143

(5)

Membership in new groups

20,870

57,898

(6)

Collection (Rs. in lakhs)—

..

..

 

(i)  Target

2.60

 N. A.

..

 

(ii) Achievement

24.3

(5) Public Provident Fund Agency System: The Public Provident Fund Agency System was Introduced with effect from -1st November 1969; The authorised agent is entitled for commission at the rate of 1 per cent on the amount at the time of opening the public provident fund account and at the same rate on all subsequent deposits into such accounts during the tenure of the agency provided that the accounts in question are not transferred to places outside the area of operation of the agent. The agency of the public provident fund agent is for three years or it can be for a lesser period also. The total collections under this scheme in 1975-76 and 1984-85 were Rs. 55 lakhs and Rs. 2143.88 lakhs, respectively.

Unit Trust of India : Unit Scheme, 1964: The scheme was introduced by the Union Trust of India, a statutory public sector investment institution with effect from 1st July 1964. The sale of' Units' through post of Sces. was started from 1st July 1966.

The scheme attracts savings of the people through the sale of its units under different schemes. These savings are then invested in the shares and debentures of good companies for the benefit of unit holders. Income from these investments after meeting the expenses of the Trust is distributed to the unit holders annually as dividend.

The face value of a unit is Rs. 10. The application for purchase of units should be in multiples of 10 units. The units can be purchased from offices of the Unit Trust, branches of most of the commercial banks, branches of selected co-operative banks, all head post offices and departmental sub-post offices. The Units for children's gift plan are sold by the offices of Trust and branches of selected co-operative banks; while the units for unit linked insurance plan and reinvestment plan are sold only at the offices of the Trust and concerned offices of the Trust, respec­tively. The rate of dividend declared during 1982-83 was 13.50 per cent per annum.

Income by way of dividend up to Rs. 3,000 exclusively from Units is exempted from income-tax (1984). This is over and above the existing exemption limit of Rs. 7,000 for income from Units and other specified categories of investments. Investment up to Rs. 35,000 in Units is totally exempted from wealth tax. This is also in addition to the existing exemption limit of Rs. 2.65 lakhs for investment in Units and other specified categories.

Unit Scheme, 1976 (Capital Units) : The scheme was introduced on January 1st. It is primarily oriented towards achieving capital growth. The face value of each unit is Rs. 100 and the units are sold in multiples of 5. The actual sale and purchase price however, varies from time to time according to market value of the portfolio. The difference between the sale and repurchase prices varies between 8 and 10 per cent. Investments in these units enjoy the same income-tax and wealth tax exemptions as applicable to the units under the Unit Scheme of 1964.

Savings Bank Prize Incentive Scheme: The Scheme was introduced in 1973 by the Central Government to popularise Post-Office Savings Bank and to provide incentive for postal savings.

The account holders, who have kept a balance of not less than Rs. 200, which qualifies for interest for the months of December to March are eligible for participation in the draw for prizes which takes place in January and July every year. In each draw of prizes 11,116 prizes are distributed throughout the country. The first prize is of Rs. 2,50,000; five second prizes of Rs. 1,00,000 each; 10 third prizes of Rs. 50,000 each; 100 fourth prizes of Rs. 10,000 each; 1,000 fifth prizes of Rs. 500 each; and 10,000 sixth prizes are of Rs. 50 each. In all, the prizes worth Rs. 32,50,000 are distributed in each draw.

A code number for each account eligible to participate in the draw is given by the post-office in which the account stands.

A prize under this scheme is treated as income for the purpose of income-tax and is therefore liable to income-tax. In respect of prize-money exceeding Rs. 1,000 deduction of income-tax is made at source at the rate of 33 per cent of the prize-money.

Persons having single or joint accounts or accounts in the name of minors are eligible to participate in this scheme. But, public accounts, security deposit accounts, sanchayika accounts and provident fund, super­annuation fund and gratuity fund accounts in post-office savings bank are not eligible for participation in this scheme. Accounts which have not been operated upon during the past six years and have been actually treated as ' silent accounts' by the post-office are not eligible for inclusion in the draw. No account holder is eligible for more than one prize in each draw.

Top

INSURANCE

Historical Background: Sir John Child, the then Governor of Bombay, was instructed by the Court of Directors to constitute an insurance office in the Bombay Island. In 1793, the Bombay Insurance Society was set up in Bombay by a few well-known European merchants.

The general insurance system on modern lines was started in second half of the 19th Century and the famous 'Triton' was set up in 1850 to undertake general insurance business. In 1834, the ' New Oriental' was established and in 1871 some prominent citizens of Bombay started the Bombay Mutual Life Assurance Society. The society was not very keen on extending its operations for several years after its formation and it was left to "the Oriental Government Security Life Assurance Company Limited, the first proprietary life insurance office to be formed in India, to expand the business in an organised manner throughout India and abroad. A few years later, a few such life insurance companies such as Bharat and Empire companies were established.

In 1874, the famous 'Oriental' was started and it gave a real impetus to the insurance business in India. Its success was mainly due to its economic and sound management. In 1881 there were 107 insurance companies, of which 38 dealt with fire, 22 with life and 47 with marine insurance in Bombay. During 1892-1900, a number of Indian insurance firms were established. But the number of Indians continued to patronise foreign concerns as they were considered to be more sound than Indian firms. In 1909, Bombay contained 34 fire insurance companies, 33 life insurance companies and 55 marine insurance companies. Companies whose head offices were in Bombay numbered 7 and most of them transacted business in life insurance. The local life insurance companies were, the Indian Guarantee and Securityship Association, established in 1872 with a nominal capital of Rs. 5 lakhs; the Oriental Government Security Life Assurance Company, Ltd., which started business in 1874; the Mutual Provident and Guarantee Society Ltd., established in 1885; and the Empire of India Life Assurance Company Ltd., which commenced business in 1897 with an authorised capital of Rs. one crore.

During the early part of the present century (1901-1918), the cult of 'Swadeshi' led to the promotion of a number of Indian insurance enter­prises. Legislation was also enacted for insurance during this period. The First World War gave a further impetus to Indian insurance business. The life insurance business transacted by 1916 was to the tune of Rs. 23 crores. Insurance companies from U.S.A., China and Germany also started their operations in India.

In 1919, the New India Insurance Co. was started by Tatas first for general insurance and later in 1929 for life insurance business too. Lalji Naranji and Manu Subedar promoted the Jupiter General Insurance Co. During 1920 to 1939, a number of insurance firms were established by the Indians and the insurance business experienced a boom; well-known among these were the Vulcan, the Laxmi and the New Insurance. There were number of institutions in Indian insurance business, and high rebates, excessive commissions and increased operation expenses became the order of the day; therefore the first comprehensive legislation was enacted covering all branches of insurance and check the evils in the business.

A number of organisations such as the Life Insurance Council and the General Insurance Council were established under the Act. The first one was dissolved after nationalisation but the General Insurance Council is in existence.

The Indian Life Assurance Companies Act, 1912 was the first piece of legislation, which was later amended in 1928. This was substituted by another Act viz., Indian Insurance Act passed in 1938 in order to introduce sound business practices in India. The same was further amended in 1941, 1942, 1944, 1946 and 1948.

The immediate impact of the war was to reduce the insurance business from Rs. 43 crores in 1939 to Rs. 33 crores in 1940. But the confidence was restored and during 1941 and 1945, 25 new life insurance offices were established. Except inflation period, the insurance business showed a considerable increase. New insurance firms such as Devkaran Nanjee Trinity Mutual, Jayabharat and Ajay Mutual were floated during this period, and the business of foreign concerns declined during 1939 and 1951.

It was in the wake of the freedom movement that such companies as the New India, the Jupiter and the Laxmi came into existence. A further spurt in the formation of new companies was witnessed during the World War II when inflationary pressure tended to swell the volume of insurance business in the country. With a view to establish a closer watch in the matters of management, investment of funds and expendi­ture of insurers, Government established a department of Insurance under the authority of the Controller of Insurance and enacted the Insurance Act of 1938. This Act was extensively amended in 1950 when further controls in the interest of policy holders were introduced.

Interlocking of business and insurance finance increased the concen­tration of economic power in a few hands. In 1945, Sir Cowasjee Jehangir Committee was appointed to examine the conditions existing in Indian insurance business. The committee concluded that the interlocking of bank and insurance finance was most injurious to national economy. The legislation on the basis of the committee's report was undertaken in 1950.

A few companies including Central India Insurance were formed during the period after Second World War, but mostly the life insurance business had started consolidating its position.

1951-1956: Even though during the initial period of the First Plan, the increase in the insurance business was not significant, but during the entire plan period, there was a substantial increase in business. The staff and group insurance schemes were introduced. The life insurance business during the period was growing even though no new business units were established. The non-Indian offices were declining in importance. Life insurance was an important capital formation agency during 1955.

1956-1965'. The historic decision of nationalisation of life insurance in India was declared on 19th January 1956 by the then Finance Minister which affected 154 Indian insurance firms, 16 non-Indian insurers and 75 provident societies.

By the Life Insurance (Emergency Provisions) Ordinance 1956, the management and control of life insurance business in India including foreign business of Indian insurers and the Indian business of foreign insurers was vested in Central Government and thus business in life insurance passed from the private sector to public sector. This was the first step towards complete nationalisation of life insurance business in India, a step never attempted anywhere in the world before on such a gigantic scale and which opened a new chapter in the history of Indian insurance. A comprehensive legislation was introduced shortly afterwards and resulted in the enactment of the Life Insurance Corporation Act of 1956.

Nationalisation aimed at widening and deepening all possible channels of public savings and mobilising these savings more effectively to finance development plans.

On September 1, 1956, the Life Insurance Corporation of India was established and took over the entire assets and liabilities of life insurers in India. From 1957, there was a steady rise in the new business in India as well as outside India. But the inflationary trend in the economy did lead to an upward trend in the expenses of Life Insurance Corporation.

By the end of the IIIrd Five-Year Plan, insurance consciousness spread significantly in the country. About 70 per cent of new life policies were issued to persons participating in insurance for the first time. A number of new schemes were introduced by the Corporation such as group and joint saving insurance, salary saving schemes or collection of premium through the post-offices. The Corporation also actively supported the house building activities through the life insurance policies.

In 1958, number of proposals for life insurance in Greater Bombay stood at 73,779 and the same increased to 94,510 in 1959. The sum proposed in 1958 was Rs. 40,94,33,681; and the same increased to Rs. 51,48,37,717 in the following year. Number of policies and sum assured also showed an increase in Greater Bombay as follows:-—

 

Number of Policies

Sum assured (Rs.)

1958

66,996

37,27,00,572

1959

84,045

45,95,77,783

Structure and business of Life Insurance Corporation : The Life Insurance Corporation of India, was set up in 1956 to take over the life insurance business of all the insurance business in India. In 1964, it entered the field of general insurance. The capital of the Corporation is wholly provided by the Central Goverrment. The head office of the Corporation is in Bombay and there are five zones with their zonal offices at Bombay, Calcutta, Madras, Delhi and Kanpur.

The Corporation is managed by the Board of Directors. The policy directives are issued by the Government of India, and it is interpreted by the Board of Directors. The policy is applied by the executive committee. It also co-ordinates and controls the functions of different departments.

Network of offices of the Corporation : On the eve of nationalisation, there were 245 private insurance companies operating in the country; that covered nearly 97 centres. The prospects of expansion of business remained fairly limited prior to the nationalisation as the erstwhile insurers were mainly interested in catering to the needs of urban populace where insurance business was profitable and there for interior rural centres were neglected. The nationalisation witnessed a shift in the out­look of the general populace, in their way of thinking and spread of life insurance came to occupy the foremost importance. As a result, a large number of offices were opened to undertake the life insurance business. The growth in its activities can be seen from the following statistics:—


Year

Number of Branch Offices

Number of Sub-offices

1956

182

34

1960

267

120

1965

388

145

1970

424

115

1976

659

23

In 1981-82, the district-wise branches of the Bombay division, of which the Greater Bombay district forms a part, were as follows :—

Greater Bombay 62; Thane 8; Raigad 2 and Goa 5. The departments of training of agents, salary savings scheme, and gioup insurance and superannuation, are also located in Bombay.

The area-wise branches of Life Insurance Corporation in Greater Bombay during 1981-82 are shown below :—


Area

Number of branches

Fort

24

Dadar

4

Sandhurst Bridge

5

Goregaon

1

Ghatkopar

1

Vikhroli

1

Bandra

1

Santacruz

5

Malad

1

Andheri

1

Kurla

1

Borivli

1

Mulund

1

Chembur

1

Nariman Point

7

Churchgate

1

Kandivli

1

Khodadad Circle

2

Ballard Estate

3

Agency Force : An agency unit forms a link between the Corporation and its policy holders. There were more than 2 lakh agents on the roll of the Corporation in 1956, the number of active agents was, however, small. There was, however, dropout in the total number of agents for various reasons, the principal among them being the inability of quite a large number of part-time agents to do the minimum quantum of business laid out by the Corporation.

The strength of life insurance agents in Greater Bombay area is given below:—


As on

Number of Agents

31st December 1956

16,105

30th April 1960

7,626

31st March 1968

12,327

31st March 1976

12,542

31st March 1982

8,683

Out of 8,683 total agents in Greater Bombay in 1981-82, 6 were crorepati agents who undertook a business of Rs. 697.41 lakhs.

Career Agents : The Career Agents Scheme was launched in 1972 to attract educated youth towards life insurance business. These career agents have made sizeable contribution to business production. The LIC started this Scheme in the beginning at 13 centres in the country, by the end of 1976, the strength of these centres rose to 38 including Greater Bombay. Besides there were eight direct agents in Greater Bombay district in 1975-76.

Development Officers '.Besides the agents, the LIC gets business through the Development Officers appointed for the specific purpose. Since nationalisation of insurance the Development Officers play a pivotal role in recruiting, guiding, and supervising the agents. The LIC had 4830 Development Officers in 1958 in the country with an average business per Development Officer of Rs. 6.5 lakhs. The number incieased to 7698 during 1975-76 along with the average business per Development Officer which amounted to Rs.23.6 lakhs. There were 50 crorepati Development Officers in Greater Bombay in 1981-82 whose individual new business was more than one crore of Rupees. The strength of Development Officers in Bombay division and in Greater Bombay area during the same period was as follows :—


Year

Bombay Division

Greater Bombay District

1958

304

N.A.

1975-76

611

547

1981-82

515

449

Progress of New Business : The total new business of the Life Insurance Corporation at the time of nationalisation in terms of sum assured was Rs. 1,48.5 crores. The various measures adopted since nationalisation resulted in a spectacular increase in the individual new business as in 1975-76, the Life Insurance Corporation completed a new business of Rs. 21,16.30 crores under individual assurance and Rs. 32,69.04 crores under group insuiance making a total of Rs. 53,85.34 crores. The relevant figures for the Bombay division and for the Greater Bombay area are shown below:—

(1) BOMBAY DIVISION


Year

New business
in terms of
policies

New business in terms of sum assured (ordinary assurance) (Rs. in crores)

New business in terms of sum assured (Group insurance and superannuation scheme)
(Rs. in crores)

Average sum assured per policy (ordinary assurance) (Rs.)

(1)

(2)

(3)

(4)

(5)

1956

68,776

33.45

3.76

4,863

1965-66

 1,44,723

1,05.80

15.65

6,229

1970-71

  1,41,609

1,81.46

45.38

9,612

1975-76

  1,80,939

2,22.43

1,68.36

12,293

(2) GREATER BOMBAY

 

Year
(1)

No. of
proposals
(2)

Sum proposed
(Rs.)
(3)

No. of
policies
(4)

Sum assured (Rs.)
(5)

1958

73,779

40,94,33,681

66,996

37,27,00,572

1959

94,510

51,48,37,717

84,045

45,95,77,783

1965-66

N.A.

1,03,84,11,269

1,30,210

1,00,33,57,371

1967-68

N.A.

1,03,32,48,426

1,06,280

97,95,74,101

1975-76

1,62,262

37,62,76,500

15,600

36,60,16,200

1981-82*  

3,27,345

6,28,77-37

1,54,980

2;29,04 76

*Figures of Rupees for the year 1981-82 are in lakhs.

Business under Salary Savings Scheme : The salary savings scheme was implemented with effect from 1st September 1966, on an experimental basis in some of the offices situated in Bombay. Subsequently the Government extended it to class III and class IV government servants working in all the offices and departments throughout the State of Maharashtra.

In 1969, the salary savings scheme was finalised with approximately 3,800 firms/institutions in Greater Bombay and the number of policies secured under the scheme from the employees of these firms/institutions was approximately 3.5 lakhs.

The progress under this scheme during 1974-75 and 1975-76 in Greater Bombay was as follows :—

 

1974-75

1975-76

Number of policies

Sum assured
(Rs. in lakhs)

Number of  policies

Sum assured
(Rs. in lakhs)

Greater Bombay

53,900

 40,35.5  

 51,263

 38,55.07

Bombay Division

66,487

 4,48,41.21

 62,997

 46,34.40

Business under Group Scheme : The following statement gives the business of group scheme by G and S Department (Group Insurance and Superannuation) completed, through branch offices in Bombay division and also in Greater Bombay area during 1975-76 :—


Division/District

Number of
Schemes

Number of
Lives

Sum   assured
Rs.

Annuity
per annum
Rs.

Premium income
Rs.

Bombay Division

  272

30,117

  36,30,24,921

2,48,364

1,70,72,740.78

Greater Bombay  

  262

27,740

 35,04,70,726

2,48,364

1,62,87,019.71

First Premium Income : The statistics of first premium income for both the Bombay division and Greater Bombay branches are given below :—

 

First Premium (1975-76)

Division/District

Non-salary savings scheme

Salary Savings scheme

Total

Bombay Division

7,20,26,983

22,01,994

7,42,28,977

Greater Bombay

6,65,46,259

18,59,904

6,84,06,163

During 1975-76, the Corporation introduced a special policy known as the Grihalaxmi Policy designed to provide life-long security for the housewife. The main feature of the policy is that while the husband who is the proposer pays the premium, the wife is the beneficiary and a trust in her favour is created under section 6 of the Married Women's Property Act. The plan provides return of all premia to the proposer if the bene­ficiary dies before the age of 55.

Top

STOCK EXCHANGE

The Stock exchange is an important constituent of capital market in any economy and provides the infrastructure for economic democracy combined with planned economic development. It provides a market place for the purchase and sale of securities. The origin of the stock market therefore goes back to the time when securities representing title to property or promises to pay were first issued and made transferable from one person to another. At the end of eighteenth century, the East India Company was the dominant body which used to transact business in its loan securities. By 1830, due to considerable increase in the volume of business in loans as well as in corporate stocks and shares, the business in Bombay was transferred in the shares of commercial banks like the Chartered Mercantile Bank, the Chartered Bank, the Agra Bank, the Oriental Bank and also the old Bank of Bombay. The shares of cotton presses were one of the prominent shares in Bombay brokerage.

Between 1840 and 1850, there were about 6 brokers recognised by both the banks and the merchants, with an entry of late Mr. Premchand Raichand as a broker in 1849-50, the trade of brokers came into promi­nence. Within a short period he monopolised the broking business in shares, stocks, bullions and partly exchanges and held all the strings of business in his own hands. The display of that brilliant financial strategy by him broking business in shares as well as in the best gilt-edged securities of those days crowned him as the " Napoleon of Finance".

Premchand's career attracted many other men into the field and fry 1860, the number of brokers increased to 60.

In 1861, the American Civil War broke out and it totally stopped the supply of cotton from U.S. to Europe, resulting in the cotton famine which at large led to unlimited demand for Indian cotton available in the largest quantity in Bombay Presidency. The large exports of cotton were paid for in bullion which poured in Bombay from Liverpool in the shape of silver and gold. Out of the total imports, bullion which amounted to Rs. 85 crores between 1861-62, and 1864-65, Bombay alone absorbed Rs. 52 crores giving an average of Rs. 13 crores per annum.

The import of this large amount of bullion was an addition to the wealth of the city and served as fresh capital for a number of new ventures such as banks and financial associations, trading, cotton cleaning, pressing and spinning, hotel companies, shipping and steamer companies, etc.

During the ' Share Mania' of 1861-65, the number of brokers increased to 200. The first vital spark of speculation authority and wealth was kindled by Asiatic Banking Corporation originally named as the Bombay Joint-stock established in 1863. But at the end of American Civil War, a disastrous slump followed and caused widespread desolation.

The depression was long and severe but the 'Share Mania' had the important' and lasting effects such as the expansion of liquid capital, and establishment of regular market in securities which helped at large to make Bombay the chief centre of money and capital market.

It was in those troubled times between 1868 and 1875 that brokers organised an informal association, and finally on or about 9th of July 1875, a few native brokers resolved upon forming an association in Bombay for protecting their trade. They also thought of providing a hall for the use of the members of such association. An indenture was executed on the 3rd of December 1837, constituting the articles of exchange and the stock exchange was thus formally established in Bombay under the title of ' Native Share and Stock Brokers' Association'.

In 1876, when the stock exchange was constituted, the entrance fee for a non-member was Re. 1 and the number of members on the list was 318. The commerce and industry thus again came into prominence, credit was restored and prosperity was regained in Bombay with the establish­ment of the cotton industry, the building of new docks, and the extension of railway routes for transport of goods. The stock exchange played an important part in these developments.

The stock exchange thus channelled the flow of investment into stocks and gilt-edged securities and materially helped Government and also trade and industry. Over almost a hundred years, during which the stock exchanges have existed in the country, through their medium, the Central and State Governments have raised crores of rupees by floating public loans.

As the exchange grew in size, so did its accommodation. The premises taken on hire in 1874 on Dalai Street were given up when what is now known as the Stock Exchange old building situated at Dalal Street was acquired in 1895. The brokers' hall was thrown open on the 18th January 1899. In 1928, the piemises were further extended by acquiring from the Bombay Municipal Corporation for Rs. 5 lakhs the adjoining plot of land abutting on Apollo Street and flanked by Dalal Street and Hamam Street.

The stock exchange at Bombay has continued to expand in size and in its stature and influence. It is not only the oldest stock exchange but also the oldest trade association in the country. It is one of the voluntary non-profit making associations.

In the earlier formative years, the stock market passed through many turbulent phases such as share mania in 1861-65, coal boom in 1904-1908, bank failures in 1913, the First World War boom, the Post-World War slump in 1923-24, and the spate of corners in 1921-25. The Bombay share market recorded a continuous trend of evolution with emergencies gradually recurring after short intervals such as Wall Street boom and crash of 1929, World Economic Depression of 1931-32, Currimbhoy Cotton Mills group crisis of 1933, steel boom of 1937, Second World War crisis of 1941, Second World War boom and post-war slump of 1946-47, Commodity markets crisis of 1952-53, acd Equity boom and Chinese aggression emergency of 1962-63.

The Bombay Stock Exchange was recognised on August 31, 1957 on a permanent basis, described as a voluntary non-profit making association. Its membership in March 1958 was 501 and the entrance fee (card value) was Rs. 17,500 with membership deposit of Rs. 20,000 and annual subscription of Rs. 15.

There is no distinction between the jobbers and brokers on the Bombay Stock Exchange. A member can act as a jobber or a broker though when he is busy on his account, he has to give a different contract note. Under the Securities Contracts (Regulation) Act, 1956, seven stock exchanges have been recognised in the country. The pattern of regulation under the Act is that of unitary control. The Bombay Stock Exchange (1875) is one of them; others are those in Ahmedabad, Calcutta, Madras, Hyderabad, Indore and Delhi. The rules, by-laws etc. have been made uniform for all the exchanges.

The Bombay Stock Exchange which is more popularly known as the 'Dalal Street' has been granted permission on a permanent basis. The firms cannot be the members of the stock exchange in their own right. Individuals and partners, and if there are other stock exchanges in the city, those can be the members of the stock exchange. If an individual is denied membership an appeal can be made to the Government whose decision is binding on the recognised stock exchange. Some of the stock exchanges are companies limited by guarantee or public limited companies under the Companies Act. But in Bombay and so also in Ahmedabad, the stock exchange is in the nature of a private club and the president is a whole-time salaried official. It is not registered under any Act.

The general administration of the stock exchange is entrusted to a committee, which in Bombay is known as the governing board. There are three sub-committees for conducting the routine business of management; they are, the arbitration committee, the defaulter's committee and the listing committee. The rules and bye-laws for the general conduct of business are framed by the stock exchange authorities and approved by the Government. Now they are more or less uniform in all the stock exchanges and conform to the rules framed by the Government under the Securities Contracts Regulation Act, 1956. Forward trading is permitted on the basis of fortnightly settlements in Bombay and on the Bombay market, there are a large number of scripts on the forward list—as many as 74, while in Calcutta they are 18. The clearing house at Bombay is managed by the Bank of India. Next to Calcutta, Bombay has the largest number of listed shares, though cotton textiles and bank shares do predominate.

The jobbers on the Bombay stock exchange are known as ' Taravani-walas' as they are said to take away the cream of the business. This group helps to maintain a broad and active market, but they also, it is stated, accentuate the fluctuations on the market. The members also employ clerks for help and they are registered as authorised clerks; there are about 1,200 clerks in Bombay stock exchange. They help in the transaction of business of the members. The trading on the stock exchange takes place during stipulated hours. The bids are offered loudly and there is lot of noise around. A large gathering of members and authorised clerks for trading; is the feature of Bombay stock exchanges, as there is a large number of transactions, involving crores of rupees on these exchanges. There are fluctuations in the prices and yields of stocks and securities and they reflect the economic as well as non-economic changes in the economy. The taxation and the economic policies of the Government get reflected in these changes.There was the post-Korean war boom in the market followed by a crash in 1952, which was tided over smoothly. There have been no serious payment crisis for several years recently. The increase in the number of listed scripts, the controls imposed by the Indian Companies Act, and the declining role of the managing agents have restrained the speculative activities on the market. Small investors are entering the market and the role of Government institutions such as L.I.C, Unit Trust of India is becoming more significant. The Stack Exchanges themselves have been making an effort to restrain over-trading through a system of margins which is in vogue in Bombay stock exchange. Here it is operative in respect of ' badla' transactions only i.e. transactions which are earned over to the next settlement. There is the margin money which is to be deposited with the clearing house and is not returnable until the settlement day of the following clearing i.e., it is retained for about three weeks or so. Further the members of the Bombay stock exchange are required to submit every day a statement of. outstanding business in respect of a few highly speculative scripts, and the president of the exchange has a right to call for additional margins from any member if there is a marked increase in his outstanding business or the president may ask the member to liquidate a portion of his outstanding business. Thus the stock market authorities as well as the Government are making an effort to restrain the speculative activities on the market. The Reserve Bank of India also through it's controls, restrains the flow of credit to the stock market and the speculative and cornering activities of the members. On the whole, the record of working of the stock exchanges has been satisfactory. The stock exchanges have provided continuous market to a growing volume of securities. They have also contributed to the growth of investment habit, particularly in the urban areas. The speculative activity on the stock exchanges is not exces sive and serious payment crisis have not been experienced. Through stringent listing requirement, they have raised the standards of company reporting and established well defined practices as regards new capital-issues. The Government of India, through the Securities Contracts (Regulation) Act has formulated a number of provisions for the regulation of stock exchanges. A separate division called the Stock Exchange Direc­torate under the Ministry of Finance has been established. It has it's main office in Bombay. The Government has its representatives on the governign bodies. Through this representation and the functioning of the Reserve Bank of India, efforts have been made to evolve suitable measures for checking excessive speculation and developing sound share market practices on the stock exchanges.

Trading in the securities is carried out at the market, generally through the agency of the stock-brokers. The private securities are listed on the stock-exchange and the member brokers are allowed to deal only in these securities. The transactions in these shares are mostly spot transactions; delivery and payment are completed after the contract is made. The stock-markets are thus the organised markets for securities and as in case of exchange of commodities at the market, they are also subject to basic influences of demand and supply. The stock exchanges ensure the liquidity of capital and the evaluation of securities and direct the flow of savings into the most productive form of enterprise. On the market, genuine speculation has the role of forecasting the real value of the investments, and this is carried put through forward trading.

There are two types of securities dealt on the stock exchange: (i)proprietorship securities which include the ordinary shares, the preference and deferred shares; and (ii) creditorship securities, i.e.9 debentures, gilt-edged stocks etc. Here the rates of interest as the return on the securities are fixed. On the stock exchange, the new issues of securities are floated largely through the prospectus. Under the Securities Contracts Act, a company is eligible for an official quotation on the stock exchange if at least 49 per cent of the issued capital is offered to the public for subscrip­tion in the first instance. The balance, through the stock-broker may be financed by associates and friends or the institutional investors. The underwriting of shares is also resorted to for ensuring the success of the issues offered to the public. The industrial finance institutions perform this function of underwriting.  

The brokers, jobbers and authorised clerks are the persons who transact on the stock market. They are classified into bears and bulls—the former operating on the expectation of a fall in prices and the latter on the expectation of a rise in prices of securities. The transactions in shares are done on the floor of the exchange which is a place of great commotion and hectic activity. The floor is divided into a number of separate booths, one for each particular security where the business in that script is transacted. The transactions on the 'floor' of the exchange are done by word of mouth and no contract is signed when the bargain is struck. The broker notes down the transaction in a small pad with all the details. After the day's transactions, the authorised clerk enters the transactions in the boot’s maintained in the office with the details as well as the brokerage charge Next day the contract notes are signed and sent to the client. The shares can be bought for cash—described as delivery contracts or the purchase transaction and can be settled within a prescribed period and they are described as forward deals. Forward deals are allowed only in few selected scripts which are generally very active and broadly held. The transactions in forward deals can be carried over by purchase or sale to the next settlement through what are known as 'badla' transactions. There are also option dealings known as ' Teji-Mandi' operations on the stock exchange. The option means the right to choose; it may be single or double i.e., both for the buyer and the seller—whether to take or not to take up the shares within the prescribed specific period which is usually of three months. There are the 'put options' where the striking price is the current market' bid' price plus a sum of contango (carry over) interest on the value of the share calculated, over the period of the option. In case of a 'call option', it is the current market offered price plus interest; the cost of option is called the option money and its magnitude depends mainly on the nature and marketability of the security and the current market conditions. Options provide a ' hedge' against price fluctuations.The option price would be a form of insurance against a rise and the investor would be in a protected bear position. The Securities Contracts (Regulation) Act has legally prohibited option dealings but on the Bombay stock exchange (and so also at Calcutta stock exchange) unauthorised 'Teji-Mandi’ business does take place.

The transfer of securities on the stock exchange is affected through a ' deed' of transfer between the one and the other holder, by a formal agreement duly stamped and signed by both the buyer and the seller. This is transferred to the register of shareholders maintained by the companies. Bearer shares can be transferred through delivery but such shares are very few on the Indian Stock Exchange. The process of registration involved in these transfers create a long delay and inconvenience to the operators on the stock market. With a view to overcoming this difficulty, a system of ' blank transfers' has been devised on the stock exchange, and has become an important part and parcel of stock exchange mechanism. A blank transfer is a transfer deed wherein the buyer's name is not entered or is left blank, so that the transfer form can be pasted quickly. This system of blank transfers is said to encourage speculation as the delivery becomes simple and there is also the saving of stamp duty. It assists 'badla' transactions and is a common form of securing a loan against the collateral security of share. But by facilitating forward business, the system of blank transfer encourages excessive speculation. It also facilitates manoeuvring of managerial control over companies by concealing the identity of the real holder. The Atlay Committee in 1924 had recommended the total abolition of blank transfers and a sharp reduction in the stamp duty on transfers. The Morrison Committee in 1936 made a similar recommendation. The Securities Contracts Regulation Act empowers the stock exchanges to make bye-laws for the regulation or prohibition of such transfers. The Indian Companies Act of 1951 also has provisions for prohibition of such control of companies through the blank transfer transactions. The blank transfers, under this regulation cannot be kept open for more than a year if the company pays the dividend annually or for more than six months in case of com­panies declaring half-yearly dividend. The reduction in stamp duty on transfers in 1955, has also discouraged such transfers.

Listing of Securities : There are certain standards or listing requirements set by the exchange and the company has to agree to certain terms and conditions laid down. The governing body of the stock exchange is responsible for granting permission to the company to have it's scripts traded on the exchange. The main object of listing is to provide a measure of safety in dealing, to the investors and is an indirect safeguard against unscrupulous manipulations. Listing does not necessarily mean the soundness of the company which has to be ultimately judged by the investor. Generally, the shares of the large companies are listed on the stock exchange, after informal discussion between the representatives of the company and the stock exchange authorities. The Securities Contracts Regulation Act, 1956 contains certain provision in respect of listing of securities on the stock exchange. It empowers the Government to compel a public limited company to have its shares, bonds, debentures listed, even by fulfilling the conditions which are prescribed by the stock exchange. A company which has been refused a quotation of its shares has a right of appeal to the Central Government which has the power to change the decision of the stock exchange. Certain provisions are imposed on the stock exchange by the Act.

The stock exchange conducted a survey (Profile of Stock Exchange Activity in India, published by Bombay Stock Exchange 1970) of 515 companies listed in Bombay in 1968-69. It covered 90 per cent of the total number of companies and 95 per cent of the total equity capital quoted in Bombay. According to the survey these 515 companies had 18.60 lakh book share­holders in 1968-69 as against 9.10 lakh book shareholders as per an earlier Stock Exchange survey covering 243 companies out of 300 companies listed in Bombay in 1961.

The following statement and Table No. 7 reveal the findings of the stock exchange survey in Bombay in 1968-69:—

 Size of Holding

Percentages

No. of share­holders cleared

Amount

No. of share­holders
non-cleared

Amount

No. of share-holders

Total share- Amount

Small
(Below Rs. 20,000)

98.67

36.86

98.96

27.30

98.86

30.44

Medium
(Rs. 20,000 to Rs. 50,000)

0.88

6.70

0.55

4.19

0.66

5.01

Large
(Rs. 50,000 and above)

0.45

56.44

0.49

68.51

0.48

64.55

 

100.00

100.00

100.00

100.00

100.00

100.00

 

 

Category of owners

Percentages

Cleared

Non-cleared

Total

1.

Individual

7.28

15.90

13 05

2.

Joint-stock-companies

12.70

26.57

22.00

3.

Financial institutions

22.16

19.73

20.79

 

(a) Unit Trust of India ..

1.73

1.41

1.75

 

(b) L.I.C. ..

11.25

6.49

8.73

 

(c) Banks

7.35

2.80

3.65

 

{d) Others

1.83

9.03

6.66

4.

Others

0.08

0.13

0.12

 

 

43.07

62.33

55.96

The stock exchange survey (Stock Exchange Official Directory, Volume 2,1984.) revealed that the position of cleared companies was even more favourable in respect of big shareholders.

The ten highest holders covered by the stock exchange survey had 43 per cent of the total paid-up equity capital of cleared companies as against 62 per cent in the case of non-cleared companies. L.I.C. was found to be the biggest among the shareholders with a holding of about 12 per cent of the total capital of cleared companies as against six per cent in the case of non-cleared companies. The survey also revealed that the percentage of total paid-up capital of cleared companies was 13 in the case of joint-stock companies and seven in the case of individuals as against 27 and 16 respectively, in the case of non-cleared companies.

The growth and development of the Bombay Stock Exchange from 1946 to 1979 is given in Table No. 8. The same also gives the market pattern of stocks listed on Bombay Stock Exchange.

TABLE No. 7
FINDINGS OF STOCK EXCHANGE SURVEY IN BOMBAY, 1968.69

(Amount in crores of Rs.)

Size of Holdings

Number of Shareholders

Nominal Value of Holding

Cleared

Non.cleared

Total

Cleared

Non.cleared

Total

No.

Percent

No.

Per cent

No.

Per cent

Amount

Per cent

Amount

Per cent

Amount

Per cent

10,000

607,614

96.79

1,207,802

 97.94

1,815,416

97.55

76.31

30.29

122.21

23.79

198.52

25.93

10,001-20,000

11,814

1.88

12,558

  1.02

24,372

1.31

16.55

6.57

18.00

3.51

34.55

4.51

20,001-30,000

3,268

0.52

3,888

  0.32

7,156

0.38

8.14

3.23

9.72

1.89

17.86

2.33

30,001-40,000

1,431

0.23

1,649

 0.13

3,080

0.17

5.05

2.01

6.01

1.17

11.06

1.44

40,001-50,000

811

0.13

1,272

 0.10

2,083

0.11

3.68

1.45

5.81

1.13

9.49

1.24

Above 50,000

2,794

0.45

6,045

 0.49

8,839

0.48

142.18

56.44

351.92

68.51

494.10

64.55

Total ..

627,732

100.00

1,233,214

 100.00

1,860,946

100.00

251.91

100.00

513.67

100.00

765.58

100.00

Holdings of ten highest

 

 

 

 

 

 

108.20

42.95

320.20

62.33

428.40

55.96

holders of which—

 

 

 

 

 

 

 

 

 

 

 

 

(1) Individuals

 

 

 

 

 

 

18.29

7.26

81.66

15.90

99.95

13.05

(2) Joint-stock companies

 

 

 

 

 

 

31.91

12.66

136.51

26.57

168.42

22.00

(3) Financial Institutions

 

 

 

 

 

 

57.80

22.95

101.34

19.73

159.14

20.79

(a) U.T.I.

 

 

 

 

 

 

6.16

2.45

7.22

1.41

13.38

1.75

(b) L.I.C.

 

 

 

 

 

 

33.47

13.29

33.34

6.49

66.81

8.73

(c) Banks

 

 

 

 

 

 

13.57

5.39

14.38

2.80

27.95

3.65

(d) Others

 

 

 

 

 

 

4.60

1.83

46.40

903

51.00

6.66

(4) Miscellaneous ..

 

 

 

 

 

 

0.20

0.08

0.69

0.13

0.89

0.12


TABLE No. 8
GROWTH AND DEVELOPMENT OF BOMBAY STOCK EXCHANGE1946-79


As on 31st December

No. of listed
companies

No. of stock issues listed

Paid (Rs.
up value in crores)

Market value of capital
(Rs. in crores.)

Average per company (Rs. in lakhs)

Total capital

Market value

Equity

Preference

Debentures

Total

1946

197

271

.....

....

.....

1,23

….

63

…..

1961

297

538

2,95

56

31

3,82

6,45

1,28

3,17

1965

502

891

3,32

73

84

4,89

8,41

1,37

1,68

1970

580

1060

8,52

1,23

1,41

11,16

17,51

1,92

3,02

1976

797

1478

13,96

1,44

2,70

18,10

25,91

2,27

3,25

1979

935

1609

18,76

1,51

3,93

24,20

40,29

3,58

4,30

Percentage increase in 1976 over 1946.

305

445

.....

....

....

13,71

....

2,60

….

Percentage increase in 1976 over 1946.

59

66

3,20

97

2,21

6,38

2,08

66

93

The table shows that over the years from 1946 to 1979 the number of listed companies quoted in Bombay went up by 738 and the corresponding number of listed stocks by 1,338. The paid-up value of listed stock simultaneously increased by Rs. 22,97 crores.

In 1971-72, on the basis of total assets, nine of the 20 bigger companies in India were quoted in Bombay, four in Calcutta, four in Delhi, two in Ahmedabad and one in Madras. On the basis of net worth, eight were quoted in Bombay, six in Calcutta, four in Delhi, and one each in Madras and Ahmedabad; while on the basis of total gross sales, eight each were quoted in Bombay and Calcutta, and two in Delhi and one each in Madras and Ahmedabad.

The structural pattern of listed stocks js outlined in Table No. 9.

TABLE No. 9
Structural Pattern of Listed Stocks at Bombay Stock Exchange


Particulars

(As on 31st December 1969)

(As on 31st December 1979)

No. of companies listed

570

2,133

No. of stock issues listed—

 

 

(i) Total

1,042

3,569

(ii) Equity

608

2,364

(iii) Preference

360

1,020

(iv) Debentures    ..

74

185

Paid-up Capital (Rs. in Crores)—

 

 

(i) Equity    ...

7,83.75

27,40.37

(ii) Preference

1,11.97

2,29.59

(iii) Total

8,95.72

29,69.99

Debentures amount outstanding (Rs. in Crores)

1,18.70

5,03.59

Total capital employed (Rs. in Crores)

10,14.42

34,73.30

Market value of capital employed (Rs. in Crores)

 

 

(i) Equity

12,68.55

45,60.54

(ii) Preference :

1,02 10

1,83.91

(iii) Debentures

1,14.75

4,79.28

(iv) Total

14,85.40

52,23.73

Average per company (Rs. in lakhs)—

 

 

(i) Share capital

158

139

(ii) Total capital

178

163

(iii) Market value of total capital

261

245

No. of companies on the cleared list

73

N.A.


The class-wise pattern of listed stock issues in Bombay Stock Exchange as on 31st December 1979 was as follows :—

Number of companies listed

935

Equity, preference and debentures

45

Equity and preference

315

Equity and debentures

23

Preference and debentures

 

Equity only

546

Preference only

1

Debentures only

5

The overall denomination pattern of listed stocks in Bombay is shown in the following statement :—

(As on 31st December 1979)


Denomination (Rs.)

Equity

Preference

Debentures

No. of stock issues listed

No. of units issued
(in '000)

No. of stock issues listed

No. of units issued
(in '000)

No. of stock issues listed

No. of units issued
(in '000)

1
         

2

1

15,00

 

 

 

 

5

7

5,48,65

2

1,38

 

 

10

730

1,19,44,91

32

75,81

3

55,45

25

12

1,30,89

6

2,44

1

9,50

50

24

41,70

4

90

1

3,43

75

1

68,58

..

 

 

 

100

232

5,12,79

412

1,39,98

30

50,99

250

2

1,23

3

16

 

 

500

 

 

2

13

5

2,72

1000

2

5

 

 

61

13,17

5000

 

 

 

 

12

3,61

Others

4

16,49,29

5

88

5

23,53

Total

1,015

1,49,13,09

466

2,21,68

118

1,62,40

Table No. 10 shows the industrial pattern (Present Position of the Stock Market in India, 1980, Published by the Stock Exchange, Bombay.) of listed stocks in Bombay stock market.
On the basis of number of companies, the groups of chemicals, dyes and pharmaceuticals, refineries and plastics stand first.

TABLE No.  10
INDUSTRIAL PATTERN OF LISTED STOCKS AT BOMBAY

As on 31st December 1979

Industry

No. of Companies

No of stock issues listed

Paid listed-up Capital (in Crs. Rs.)

Debentures (in Crs. Rs.)

Totalcapitalemployed(in Crs. Rs.)

Market value of capital (in Crs. Rs.)

Average per company (in Lakhs Rs.)

Total

Equity

Preference

Debentures

Equity

Preference

Total

Equity

Preference

Debentures

Total

Share Capital

Total Capital

Market Value

Banks

3

3

3

7.42

7.42

....

7.42

18.39

18.39

247

247

618

Insurance

....

198.88

256.58

56.15

1.58

194.38

252.11

134

596

452

Investment and finance

43

69

41

10

18

54.75

2.95

57.70

1.00

16.33

28.16

0.23

1.00

29.39

170

181

326

Trading

9

11

9

1

1

14.83

0.50

15.33

27.24

62.29

29.81

3.90

24.22

57.93

318

566

526

Electricity

11

36

11

9

16

29*95

5.10

35.05

62.07

68.59

1.17

69.76

443

443

498

Transport

14

18

14

4

60.90

1.17

62.07

....

0.75

0.03

0.10

0.13

75

75

13

Coal Mining

1

2

1

1

0.65

0.10

0.75

....

1.20

0.97

0.07

1.04

60

60

52

Other Mining

2

5

3

2

1.13

0.07

1.20

62.45

80.64

2.55

83.19

446

446

594

Cement

14

27

15

12

58.99

3.46

62.45

14.79

13.86

0.53

14.39

92

92

89

Potteries, tiles

16

26

19

7

14.13

0.66

14.79

3.40

137.38

183.45

7.95

2.84

194.24

219

225

318

Paper and Hardboards

61

117

80

34

3

123.83

10.15

133,98

14.17

140.55

263.22

7.55

13.58

284.35

197

219

444

Cotton textiles

64

127

68

47

12

116.34

10.04

126.38

5.29

3.94

0.30

4.24

264

264

211

Jute textiles

2

4

3

1

4.96

0.33

5.29

14.90

148.28

423.52

11.37

15.94

450.83

404

449

1,366

Synthetic Fibres, wool

33

63

37

19

7

120.20

13.18

133.38

3.27

100.32

188.38

5.01

3.49

196.88

136

143

231

Electrical equipment

70

112

76

33

3

91.26

5.79

97.05

15.00

82.84

63.10

8.91

12.08

84.09

5784

8284

8408

Iron and Steel

1

5

1

3

1

51.44

16.40

67.84

12.00

62.67

94.54

5.71

12.00

112.25

1689

2089

3741

Aluminium

3

8

3

3

2

44.24

6.43

50.67

19.79

175.76

172.53

12.91

19.41

204.85

119

134

156

Metals and Products

131

234

143

78

13

142.34

13.63

155.97

25.42

134.89

230.07

5.79

22.36

258.22

421

518

993

Transport equipment

  26

53

27

19

7

102.76

6.71

109.47

5.75

76.00

120.86

4.10

5.48

130.44

146

158

271

General Machinery

48

86

54

26

6

65.34

4.91

70.25

13.42

87.84

143.64

4.24

13.22

161.10

130

154

282

General Engineering

57

86

62

17

7

70.30

4.12

74.42

6.15

427.30

848.79

22.72

5.61

877.12

348

353

724

Chemicals Pharma­ceuticals.

121

193

133

51

9

396.78

24.37

421.15

0.75

39.87

27.98

4.20

0.54

32.72

118

120

99

Sugar and Breweries

33

58

34

23

1

34.27

4.85

39.12

7.20

39.24

66.29

1.30

6.41

74.00

110

135

255

Food Products

29

52

35

11

6

30.32

1.72

32.04

....

31.49

47.24

47.24

242

242

353

Tea Plantations

13

14

14

31.49

31.49

2.58

3.58

0.22

3.80

36

36

54

Other Plantations

7

12

7

5

2.10

0.48

2.58

 

48.10

54.20

2.22

3.17

59.59

297

320

397

Tyres  and  Rubber Products

15

27

17

8

2

42.07

2.48

44.55

3.55

48.10

54.20

2.22

3.17

59.59

297

320

397

Miscellaneous

108

161

115

42

4

162.84

11.09

173.93

21.38

195.31

295.33

9.74

21.38

326.45

161

180

302

Total

935

1609

1025

466

118

1875.63

150.69

2026.32

393.27

2419.59

3527.26

124.37

377.11

4028.74

217

259

431

 

The Bombay Stock Exchange has contributed in the aggregate more than Rs. 4 crores to the State exchequer during the period 1947 to 1969. The average annual revenue collected from the stock exchange by the State every year from 1947 to 1969 has exceeded Rs. 17 1/2 lakhs.

The mean of the index numbers of the daily average turnover, computed on the basis of the number of working days in each clearing according to the number of shares was about 97 in 1965, 92 in 1966, 82 in 1967, 63 in 1968 and 71 in 1969.

The annual volume of turnover by value was the highest in 1951. The plan period of 1961-65 witnessed a hectic market and the most active period.

Clearing Houses: The enormous task of settling the thousands of transactions entered into on the stock exchange during each settlement period is done through the ' clearing house '. It works on the same principles as the bankers' clearing house. The actual physical turnover of cash and movement of shares are reduced to the minimum by the elimination of all the intermediaries in the numerous transaction during the given accounting period. The parties to the contract deal with the clearing house to which they submit a balance sheet of their purchases and sales over the account period and settle only the net balances of securities and money. This system is very convenient to the members, and covers a large volume of transactions. The actual technique of clearance is the most complex part of stock exchange operations, involving the statement of all individual transactions and their quotations in terms of settlement prices and the make up prices. Yet the physical labour involved in a multiplicity of deliveries is reduced to the minimum by means of clearing.

On the Bombay Stock Exchange, there are certain procedures laid down for clearance. The last day of business, which is usually a Friday, is the day on which all transactions are either to be closed or carried forward to the next settlement. The badlas are arranged on this day. The new account commences on the following Monday. The last day for delivery on which all securities are to be delivered to the clearing house is usually the fourth or fifth day following the badla day. The pay.in.day which is the eighth or thenineth day following the badla day is the day on which all cheques are to be deposited in the clearing house, together with a list of the payments due or receivable. The pay.out.day is the day on which cheques are issued by the clearing house in favour of the members having credit balances; this is generally the second or third day following the pay-in-day.

Government Securities Market: This market differs from the share market on the basis of absence of risk and uncertainty as regards dividends or the capital. It is popularly known as the gilt.edged market. Further the investors are mainly institutions rather than individuals, the commercial banks, the L.I.C, the State Bank of India and the Provident Fund authorities are the important holders of government securities. Reserve Bank of India is an important holder as well as the predominant operator on the market through its open market operations, issuing the new floats, it takes up a proportion of the loans. Stock.brokers are important in the buying and selling of government securities on the market. The transactions are large in magnitude and the bulk of the business is handled by a relatively small number of brokers. There are other large number of small brokers but their total business is very small. The bulk of business is carried out by the Reserve Bank of India's brokers who number 30 in all the three important centres: Bombay, Calcutta and Madras.

The Government securities market is not an auction market like the share market. The average size of the transactions is large so that each purchase and sale has to be negotiated, though there is keen competition among the brokers and the jobbers. In a way there is an element of compulsion, as institutions are compelled to invest a part of their assets in government securities, and the operations of the Reserve Bank of India dominate the functioning of the market. The Reserve Bank of Indian operates in all securities, short and long. This makes its policy broad and flexible. Lately, the State Government securities are also entering the market as their number has been fast rising.

As in the share market, brokers play an important role in the buying and selling of government securities. There are some brokers who specialise in government securities but since transactions in government securities are of large dimensions, the bulk of the business in these securities is handled by a few brokers. Yet the market is specialised and competition is strong. The specialised financing institutions do a good job of bargain, hunting and generally obtain 'fine' quotations. The Reserve Bank of India, of course, acquires a large stock from the new issues of Government and uses them for its open market operations.

The objectives of its open market operations varied from time to time based on the existing economic situation and the trends in the money and capital markets. Yet by and large, these operations have not assumed the role of a full--fledged instrument of credit policy. They have been used in India more to assist the government in its borrowing opera­tions and to maintain orderly conditions on the market, than for influen­cing the cost and availability of credit. The objectives of what is called grooming the market, such as acquiring securities nearing maturity to facilitate redemption and to make available on tap, a variety of loans to broaden the gilt-edged market have been more prominent in the conduct of the open market operations. On the whole, these operations have been consistent with the monetary policy of the Reserve Bank and avoided violent fluctuations in the gilt.edged prices. They have enabled the Reserve Bank to keep in close touch with the market and fill the gaps in demand and supply with a view to broaden the market.

The Reserve Bank's operations on the market are largely conducted in Bombay, though some transactions do take place in Calcutta and Madras. The Reserve Bank has no direct representative on the market but functions through the approved brokers. The Bank does not publish either the particulars about the various loans it is prepared to buy or sell or the rates of it's dealing. The brokers are verbally informed of the changes in this respect. The rates of sales and purchases are fixed in the light of the prevailing conditions in the market. Sometimes the mere announcement of the rates is sufficient to produce the desired effect on the market. Generally the Bank is an outright buyer in near-dated securities and an outright seller in new issues and long-dated loans. In addition, the Bank undertakes switches which are generally from shorter dated to longer dated loans. The policy of switches is intended to help the shifting preferences of the market and to establish and maintain a harmonious pattern of yields.

Top

BULLION TRADING

India has been traditionally known for her bullion trading. In Bombay, the organisation of the bullion trade evolved out of a few small shops on the Sheikh Memon Street where trading was done under the open skies. Gold and Silver were dealt in by four merchants who imported bullion and distributed all over the country through shroffs and bankers. All these transactions were based on customs and largely carried out verbally due to the high standard of integrity observed by the business­men in the forward market. The trading was on the basis of monthly settlements and fortnightly clearings, and the trade was a very flourishing one.

During the First World War period, the volume of business increased rapidly and there were heavy fluctuations on the bullion market. There was an acute shortage of silver between 1917 and 1920. From 1917, the Government took over all the imports of gold and silver and released them in the market. Attempts were made to organise the trade and to evolve rules for the settlement of business. Seven leading silver merchants in Bombay took the first step to put the bullion trade on an organised scale by establishing the Silver Merchants' Association, a loosely.knit organisation. It formulated the rules for settlement of business and the working of the market. Bazar Merchants' Association was formed in 1920, but was replaced by Bombay Bullion Exchange Limited in 1923. After the war the trade in gold and silver expanded rapidly and Bombay, being the nearest eastern port for the West, was the chief centre for the marketing of bullion both for the internal and external trade.The bullion prices started rising after the Second World War and the same trend is still continuing.

The Bombay Bullion Exchange Ltd. is the largest exchange in India. The Exchange was a public limited company with a share capital of Rs. 102 lakhs divided into 200 shares of Rs. 5,000 each. These shares were held by about 138 persons when the Exchange went into voluntary liquidation in 1947. The board consisted of 12 directors elected by the share.holders, one.third of them retiring by rotation. Besides the share­holders, there were trading members who had no share in management but were permitted to enjoy all the trading facilities. Trading members were of two categories, ordinary members who paid an annual sub­scription of Rs. 251 and associate members who paid Rs. 151 per year. There was a committer elected by the shareholders known as the merchant's committee and this committee with the board of directors managed the business on the exchange. The board of directors had special powers, pertaining to admission fee, the tenders etc. The merchants' committee was mainly an advisory organisation. Most of the prominent bullion merchants of Bombay were enrolled as members. The exchange had a building of it's own with trading ring, offices, safe deposit vaults and other facilities.

Clearing House.—The exchange established the clearing house in 1936 for the settlement of forward business. This facilitated the issuing of delivery orders which had to be passed on from party to party and also avoided the risk of making payment in cash. It also provided safeguards against frauds and false representation by members for collection of dues.

The exchange also framed elaborate rules and bye.laws to regulate forward trading in bullion. These have established certain sound practices and customs. The outstanding transactions known as badlas in case of cornering, carried a compensation of Rs. 3.50 per unit of 100 tolas in case of silver, which lessened the temptation of speculation and cornering of silver or gold. The trade practices and precedents, the ruling and decisions of the board, and the judgements and orders of the courts of law made the rules of governance of the market more perfect.

The outbreak of the Second World War in September 1939, led to a complete disorganisation of the market and violent fluctuations in prices. The price of gold shot up from Rs. 34 per tola in March 1938 to Rs. 44 in May 1940 and Rs. 90 in May 1943. There was a ban imposed on the import of bullion and the exports were brought under the control of the Reserve Bank of India. An attempt to control the forward trading in bullion was made in 1943, when under the Defence of India Rule 90C, the Government prohibited all forward contracts which did not provide for delivery of bullion within a specified period. These restrictions were removed after the war, in January 1946 and forward trading in bullion was again freely resumed.

By 1947, apart from the Bombay Bullion Exchange Limited, the following two more associations were conducting forward trading in bullion, though a large part of the trade still was conducted by the Bombay Bullion Exchange. (1) Marwari Chamber of commerce:—This organisation was mainly interested in the trading of oil.seeds and wheat, but as forward trading in these commodities was prohibited during the war, the Chamber started trading in bullion. It had 203 ordinary members, 77 associates and 3 special associates. The membership fee was Rs. 75 for ordinary, Rs. 51 for associate and Rs. 15 for special associate members. The board consisted of 25 directors elected by panels of shroffs, commission agents and brokers. The chamber also maintained a clearing house. (2) East India Chamber of commerce:—It was incorporated in 1934 and since 1944, it has been doing forward trading in bullion in units smaller than permitted by the Bombay Bullion Exchange Limited. It was therefore known as ' Tukada Bazar'. There were about 485 members. The board of directors consisted of not less than 15 and not more than 21 directors. Clearings were weekly and units of transactions were 25 tolas for gold and 700 for silver. There was a trading hall but no separate clearing house.

In May 1947, the Government of Bombay appointed a cabinet committee to examine the various problems relating to forward trading in bullion. On the recommendations of the committee the Bombay Forward Contracts Act, 1947 was enacted. As a result forward bullion contracts entered outside the recognised association were declared illegal. The committee also suggested a single association for conducting forward trading in bullion. The Bombay Bullion Exchange was not very willing to reconstitute itself on the lines suggested by the committee for the absorption of the smaller units. So in June 1948, a small committee consisting of the representatives of the Bombay Bullion Exchange Limited, the Marwari Chamber of Commerce and the East India Chamber of Commerce was constituted.The committee submitted a draft memorandum to the Government of Bombay, which was approved by the Government. On the basis of this memorandum and the suggested articles of the association, the Bombay Bullion Association Ltd. was incorporated on 17th September 1948 as public limited company under the Indian Companies Act. The Bombay Bullion Exchange went into voluntary liquidation and its assets were taken over by the new Association. The Government of Bombay and later the Government of Maharashtra supervised the regulation and control of forward trading in bullion by the Bombay Bullion Association from 1947 to 1960 when the Government of India took over the regulation of this trade. The Government of India on the recommendations of the Forward Markets Commission recognised the Bombay Bullion Association Limited on 26th October 1960, and the Forward Contracts Regulation Act, 1952 was made applicable to the association, under the supervision of the Forward Markets Commission. The Association, with it's highly developed organisation carried out it's policies of regulation and control smoothly. However certain problems had developed in this trade.

For the past many years, a steady upward trend has been persisting in bullion prices, created by the scarcity of supplies and the rising demand created by inflationary trend. The bulls have therefore dominated the market. Some strong speculators have been resorting to the cornering of stocks; the bearers by their behaviour have aggravated the situation. As a result, there have been frequent crises on the bullion market. The authorities of the Association who tried to resolve the crisis did not get sufficient co-operation from the members. The bullion market could be manipulated for the personal ends of a few speculators to the detriment of the bullion trade as a whole and the consumers at large. The association has been endeavouring to make the market run smoothly and steer it out of difficulties with the co-operation of sober traders and the Government.

Forward trading in bullion is quite widespread. It means a contract to buy or sell a specified quantity and quality of bullion at an agreed price at a future date. The prices are determined by the expectations of the buyers and sellers which in turn are influenced by multiple internal and external factors. Badla transactions which mean carrying over the outstanding transactions from one settlement to the next settlement are common. When the price quoted in the current settlement is lower than for the next settlement it is described as sidha badla, if it is higher it is known as ulta badla. These badlas attract graded automatic margins of steep progression payable by traders at the rates prescribed, depending on the magnitude of fluctuations and badla differences. If there are idle funds available, bankers and financers who want to earn interest enter the market and provide the funds for badla transactions and these transactions are described as Vyaj-badla as interest charges have to be paid on these funds. The return on these funds is 9 to 12 per cent.

There are certain types of contracts entered into by the traders, tejimundi, fatak, jots, gaii, which are considered to be illegal. Since the Bombay Forward Contracts Control Act, these forward transactions are controlled by the Government and certain regulatory provisions are included in the Act. The unit of forward transactions in gold was 250 tolas and in silver 1 bar weighing 2,800 tolas. They are effected every month and generally there are twelve settlements during the year (except when there is an additional month, Adhik Mas) and are settled on the 15th day i.e. Pournima of the month. The board of the Association can fix the days for settlement. The rules about the delivery, purchase price, tender.able bullion and auction are all framed by the board. The forward trading is under the supervision of the Forward Markets Commission. The Commission examined all aspects of the question of forward trading in bullion in the country, and suggested it's continuation on the basis of it's large volume and the long tradition in this business. It suggested that the trading should be limited to a few cities in the country including Bombay where both silver and gold forward trading should continue. So the Bombay Bullion Association continued functioning under the supervision of the Commission. There are the bye.laws of the Association regulating the business hours of trading unit, contract period, settlement of business, etc. The functionaries on the forward market are many. The Choksies are the wholesale dealers in gold and silver. They were the importers earlier and now also hold large stocks of bullion. Shroffs or the indigenous bankers act as middlemen between the Choksies and the upcountry dealers. There are the speculators who deal on their own, and the brokers who enter the market on behalf of their clients. The jobbers buy and sell at narrow prices and square up to their outstanding business at the end of the day. They minimise the risk on the market and import liquidity. Jewellers and jari makers are also large purchasers of bullion for their professional work.

Spot Trading: The production of gold and silver in India is relatively small. Yet the demand for bullion is very large. Ready transactions are effected over the counter against cash payment and the trading is done either directly by the public or through the dealers. Standard marked bars (called lagdies) of standard fineness are available in the market. The trade is based on the confidence that the clients have in the seller. The spot market is constituted of Choksies i.e. the wholesale dealers, the retail dealers, the goldsmiths, the brokers and the commission agents. The market is well organised, and the prices are widely known. The bullion market is spread all over the country. The largest and the best organised is the Bombay Bullion Market, as Bombay is the chief distributing and entrepot centre for bullion. Bombay also gives the facilities for refining and assaying, and from all over the country the bullion comes here for being melted, refined and cast into commercial sized bars. Distribution of bullion throughout the country is done through Bombay. The vast and prosperous population of Bombay, the large numbers of jewellers, dealers and artisans have made Bombay the centre of this large established trade.

Top

BILL MARKET SCHEME

The absence of a well.developed bill market has been considered to be a serious lacuna in the money market. This limited the scope for short-term investment by the commercial banks.

Sale and repurchase of bills was limited in value. So to popularise the use of bills and develop the bill market, the R.B.I, in January 1952 introduced a bill market scheme under Section 17(4)C of the Reserve Bank of India Act. This section enables the R.B.I, to make advances to scheduled banks against security of usance promissory notes or bills drawn or payable in India and maturing within 90 days from the date of advance. Under the bill market scheme the scheduled banks woulp convert the demand promissory notes obtained by them in respect of loans, overdrafts and cash credit granted to them into usance promissory notes maturing within 90 days and to lodge such usance promissory notes with the Reserve Bank of India for refinance. The minimum limit for an advance which a bank could take from the Reserve Bank of India at any one time under the scheme was in the first instance Rs. 25 lakhs, and each individual bill tendered by the scheduled banks to the Reserve Bank of India for advances would not be less than Rs. 1 lakh. During the first year of the operation of the scheme, it was confined to the scheduled banks with deposits of Rs. 10 crores or more on 31st December 1951.

In 1953, the scheme was extended to scheduled banks having deposits of Rs. 5 crores or more provided they were in possession of a licence granted by Reserve Bank of India. The advances to banks were to be made at 0.5 per cent below the bank rate, and this was in order to popularise the scheme. A further inducement was that half the cost of the stamp duty incurred in converting demand bills into time bills was tb be borne by the Reserve Bank of India. The objective of the scheme was to popularise the use of bills on the money market. Advances of the Reserve Bank of India to scheduled banks under the bill market scheme increased from Rs. 81 crores in 1952 to Rs. 3,23 crores in 1965-66.

In 1954, the scheme was extended to all licensed scheduled banks and the minimum amount which could be borrowed was reduced to Rs. 10 lakhs, and the minimum amount of each individual bill tendered as security was lowered from Rs. 1 lakh to Rs. 50,000. Thus the advances rose from Rs. 66 crores to Rs. 1,48 crores. By 1956, with the increasing use of the scheme, the R.B.I, removed the inducements of bearing cost of the stamp duty and the lower rate of interest. The rate of interest charged was 3.5 per cent. The Reserve Bank of India reserved the right to vary the rate of interest charged at its descretion. The effective rate of interest was 4 per cent and this was the common rate for all the advances to the banks from the Reserve Bank of India. When the bank rate was raised to 4 per cent in 1957, the stamp duty on usance bills was reduced to 50 ps. per 100 rupees and the minimum amount which can be borrowed was reduced to Rs. 5 lakhs. Even then the borrowing under the scheme was costlier than that against the government securities.

In 1958, for restraining the reliance of the banks on Reserve Bank of India under the scheme, for the busy season, the credit limit was reduced to 50 per cent of the previous year's level and the period of the availability upto the end of May 1960 instead of for the whole year. In October 1958, the scheme on an experimental basis for one year was extended to export bills, the minimum amount of advance being Rs. 22 lakhs. Reserve Bank of India agreed to bear half the cost of stamp duty on the usance promissory notes and the interest rate chargeable was 4 per cent. The scheme was liberalised in 1959. The minimum amount that could be borrowed was lowered to Rs, 1 lakh and the Reserve Bank of India further agreed to bear the entire duty on the usance promissory notes lodged with it as Security.

In 1960 the penal rates were introduced by the Reserve Bank of India to restrain the credit expansion of the commercial banks. The three tier rate system was introduced in 1951, yet the Reserve Bank of India was liberal in sanctioning limits under the bill market scheme to meet the genuine credit needs of industry and trade. Special larger credit was provided on bills to the sugar and jute mills. Refinancing facilities and additional quotas under the scheme were provided to the banks providing advances to small scale industries and co-operative banks. Similarly for export finance, under the export scheme, advances were given on the individual usance promissory notes/Again on 23rd March 1963, Reserve Bank of India introduced a new scheme viz., 'export bill credit scheme'. The advances under the scheme increased from Rs. 11.8crores in 1963 to Rs. 26.69 crores in 1964. Thus the bill market scheme did encourage the use of bills which are known as self liquidative instruments on the money market.

With the policy of selective credit liberalisation of the Reserve Bank of India, the bill market scheme was extended to the food procurement and allied activities by Government agencies. The scheme was revived in November 1955. Under this, the banks were eligible for refinance from Reserve Bank of India at the bank rate without limit in respect of supplies, packing credits to exporters and advances to State Governments, their agencies and Food Corporation of India for procurement, storage and distribution of food grains. But this amount of refinance was to be taken into account in computing the net liquidity position of the bank which determines the cost of Reserve Bank of India accommodation for all other purposes. Thus the bank's availability for such finance is limited. But the refinance under the bill market scheme against advances to State Governments, their agencies and Food Corporation of India for food procurement, storage and distribution as were in excess of the maximum level of such advances in 1965 were excluded, and this was to help the State in its food policies and to enable the banks to satisfy the seasonal demand. But the amount of facilities sought by the banks in the busy season of 1966 was small, but this was partly due to the small demand for credit in 1966 and so the smaller reliance of the banks on Reserve Bank of India's advances. Banks were also afraid to borrow more under the scheme because of its impact on their net liquidity position. Yet the scheme has become a permanent feature of the credit system in the country and has given some elasticity to the money market. The advances under the scheme have been rising and there is a hopeful future for the bill market. The commercial banks can raise the necessary resources for meeting the mortgaging genuine needs of trade and industry without the need for their government securities. This provides the scope to the banks to extend their activities to the rural areas and the small customer in the urban areas.

The bill market scheme was intended mainly for the development of the market and an increase in the volume of bills. But the new techniques of overdraft adopted by the commercial banks and the decline in the use of bills in financing trade have reduced the need for a wide bill market, which was traditionally an important part of the money market in Western countries. With the nationalisation of commercial banks, the supply of credit by the commercial banks tends to be rather productivity.oriented than security.based and also limits the scope for bills and the bill market in India.

Top

JOINT-STOCK COMPANIES

The modern joint-stock companies have evolved from purely proprie­ tary or partnership type of concerns of the past. The joint-stock company as it exists today is a more stable and suitable form of business organization through which instability and risk involved in the business of a single individual or a partnership concern can be reduced. Under joint-stock company, a number of merchants come together and share the risk jointly.

A The joint-stock companies were for the first time registered according to the Act XLIII of 1850 and afterwards they were regulated by the Act VI of 1882.

Since 1876, the number of companies in Bombay and their capital have steadily increased in consequence of the natural expansion of the city and its trade interests. The same is revealed from the data given in the following statement :—


Year

No. of companies

Nominal capital
(Rs. in lakhs)

Paid-up capital
(Rs. in lakhs)

Average number of companies registered
annually

1875-76

75

859

536

1885-86

147

1028

802

14

1895-96

191

1322

880

14

1905-06

241

1889

1303

14

The number of registered companies further increased to 308 during 1908-09. Out of 308 companies, 169 were mills and presses, 97 trading companies, 18 banking and insurance companies, 8 land and building companies, 7 mining and quarrying companies, 3 sugar manufacturing concerns, 2 ice manufacturing concerns, one tea and planting company and three others. The nominal capital of all the 308 companies together amounted to about Rs. 29 crores, whereas the total paid-up capital amounted to Rs.19 crores. Besides, at the close of 1908.09 the number of companies limited by guarantee in Bombay city was eight, of which six were insurance companies.

In the absence of records regarding the companies in Bombay city from 1908-09 upto 1957-58, it is difficult to trace the gradual evolution of joint-stock companies for that period. The year 1958-59 recorded a further increase in the number of joint-stock companies in Greater Bombay, and the same stood at 4,156. Of this, the highest in number were the companies engaged in trade and finance as the same stood at 1,679 with the total authorised capital of Rs. 277 crores and paid-up capital of Rs.97 crores. Of the remaining number of 2,477 joint-stock companies, 890 were the companies engaged in the processing and manufacture of metals, chemicals and products thereof, 428 in the processing and manufacture of foodstuffs, textiles and leather products; and 502 in processing and manufacture not classified elsewhere. Besides in 1958-59, there were 275 companies engaged in personal and other services; 117 in construction and utility services; 90 in community and business services; 71 dealing in transport communication and storage; 64 in mining and quarrying ; and 40 in agriculture and allied activities.

The joint-stock companies are divided into two kinds viz., the private limited companies and the public limited companies. The Indian Companies Act of 1956 describes a private company as one which restricts the right to transfer its shares, if any, limits the number of its members to fifty and prohibits any invitation to the public to subscribe for any shares or debentures of the company. The Act further lays down that no company, association or partnership consisting of more than 20 persons shall be formed for the purpose of carrying on any other business that has for its object the acquisition of gain by the company, association or partnership, or by the individual members thereof, unless it is registered as a company. Thus, registration is made compulsory for these companies.

The number of joint-stock companies in Greater Bombay in 1967, 1971 and 1976 is shown below:—


Year

Companies limited by shares

Companies limited by guarantee and associations not for profit

Total

 

Public

Private

Public

Private

 

1967

892

4133

164

12

5201

1971

908

5408

183

16

6515

1976

1206

7623

202

32

9063

During 1975-76, Greater Bombay accounted for about 88 per cent of the total joint-stock companies in the State. On 31st March 1977, there were in all, 9,588 joint-stock companies registered in Greater Bombay and the same accounted for 88 percent of the total of 10,895 in the State. As against this, the number of registered joint-stock companies in India stood at 48,057 and the number of companies in Greater Bombay accounted for about 20 per cent of the total in India. Out of 9,588 registered joint-stock companies in Greater Bombay, 1,258 were public limited companies, 8,085 were private limited companies, and 245 were grouped as associations not for profit and guarantee companies.

The following statement gives the distribution of joint-stock companies in Greater Bombay as they existed on 31 st March 1977:—.


District/State

Government
companies

Non government
companies

Total

Associations
not for profit
and
guarantee companies

Public

Private

Public

Private

Public

Private

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

Greater Bombay 

15

23

1243

8062

1258

8085

245

Maharashtra State

23

34

1450

9066

1473

9100

322

On 31st March 1983, there were in all 17887 Joint-stock companies registered in Greater Bombay, of which 16617 were companies limited by shares and 270 were companies limited by guarantee and not for profit.

Top

SECTION II—TRADE AND COMMERCE
TRADE ROUTES

Bombay figured in the writings of ancient travellers as one of the ports of Thane coast, which once played a leading role in the foreign commerce of Western India. A steady increase in the external commerce of Bombay was especially noticed since the beginning of the nineteenth century. The opening of the Suez Canal in 1869 effected a complete revolution in the carrying trade of Bombay which had upto that date been restricted by a lengthy voyage round the Cape of Good Hope. With the improvement of communications and means of conveyance as also concessions given by the then Government, Bombay gradually developed into the chief centre of commerce both internal and external. Bombay's status as the 'Gateway of India' even today remains unchallenged.

Now, the Bombay Port Trust, the domestic and the international air-port, Central and Western railway routes and four national highways have provided Bombay with good communication infrastructure connecting it with all the important places within the country. Principally by reason of its present position, Bombay plays a vital role as the centre of entrepot trade of the country.

The internal or inter-regional and international trade routes emanating from Bombay which are responsible for developing Bombay into one of the biggest business and trade centres can be classified according to different modes of transport used.

In 1909, (The Gazetteer of BombayCity and Island, Vol I, 1909.) the internal or inter-regional trade routes connecting Bombay with other States in India consisted of road routes, rail routes and coastal routes. Bombay was connected by rail-routes of the Great Indian Peninsula Company and Bombay, Baroda and Central India Railway Company. The Great Indian Peninsula Railway connected Bombay with south­eastern and north-eastern portions of India. Whereas the Bombay, Barodia and Central India Railway connected Bombay with Gujarat, Rajputana, Central India, United Provinces and Punjab.

The bulk of trade was in cotton and grain brought from the Deccan and Central Provinces by the G.I.P. Railway and from Gujarat by the Bombay,Baroda and Central India Railway.

The inter-coastal trade routes connected Bombay port with the ports of Calcutta, Madras, Cochin, Karachi, Kaiidla, Porbundar, Janjira, Goa, etc. The chief items of coastal imports were raw cotton, rice, wheat, sugar, raw wool, opium, spices; whereas the chief items of coastal exports were salt, cotton piece goods, twist cotton yarn, metals, raw silk, sugar, etc.

The trunk routes of the Central and Western railways originating from Bombay connect her with the markets all over India. Bombay is the focal point of rail routes radiating in the northern, eastern and southern directions.

The three rail routes viz-, Bombay-Pune-Bangalore-Guntakal-Madras; Bombay-Bhusawal-Nagpur-Howrah; and Bombay-Bhusawal-Itarsi-Satna-Allahabad-Kanpur on the Central railway have afforded a good network of communications to important markets in the State of Mahara­shtra as well as to eastern, southern and central India.
The two railroutes on the Western railway viz., Bombay-Baroda-Mathura-Delhi, the same reaching upto Jammu Tawi touching Saha-ranpur-Ludhiana-Jullunder; and Bombay-Baroda-Ahmedabad, have made direct transport facility available to entire North India as well as to Gujarat and Rajasthan.

The principal commodities arriving in Bombay from Madras-Guntakal-Bangalore-Pune-Bombay rail-route of Central railway are oil-cake from Davangere and Raichur; chemicals from Amarnath; tea from Cochin and paper from Dandeli. Among the other principal commodities arriving in Bombay from other rail routes including iron and steel products from Bhilai, Ganour, Bhatinda, Indore; oil-cake from Amritsar in Punjab and Akola, Dhue, Badnera and Tumsar in Maharashtra; paper from Ballarshah in Maharashtra and from Jagdhari; cotton textiles from Delhi, Ahmedabad; ferro-manganese from Tumsar and artware from Morarabad and Jaipur.

Besides these rail routes, Bombay Port Trust railway also undertakes loading and unloading of foreign traffic carried through Bombay port.

The Bombay Port Trust commissioned with effect from 1st January 1915, owns and operates its own railway which is connected to the broad gauge main lines of the Central and Western Railways at its intercharge railway yard at Wadala. The Railway runs for about 11 km. of straight route between Ballard Pier and Wadala, and has an extensive network of tracks of about 25 kilometres. It serves the docks as well as the important installations and factories on the Port Trust estates. This railway itself handles over 4 million tonnes of traffic annually. The same represents about 60 per cent of total rail-borne goods traffic from Bombay city.

Bombay is also served by four important National Highways. These four National Highways starting from Bombay are:—(1) Bombay-Agra Road, (2) Bombay-Ahmedabad Road; (3) Bombay-Pune-Bangalore Road; and (4) Bombay-Goa Road. The Bombay-Agra National Highway is the most important artery of traffic to the northern and eastern Maha­rashtra as well as to Upper India. The road further reaches Delhi and Amritsar. The principal commodities arriving in Bombay from this route consist of vegetables from Nashik; fruits from Jalgaon; readymade garments from Bhatinda; engineering goods from Ludhiana and Jullunder; and artware and handicrafts from Amritsar, etc. The Bombay-Ahmedabad-Jaipur national highway is mostly used for transportation of raw cotton from Ganganagar; cotton textiles from Ahmedabad, Surat, Surendranagar and Sidhapur; textile yarn from Jamnagar; and non-elect­rical machinery from Rajkot. The goods transport on Bombay-Pune-Bangalore-Madras road consists of cotton textiles from Madras, Mysore, Bangalore and Gokak; engineering goods from Bangalore and Pune; textile yarn from Gokak ; iron and steel products from Khopoli, etc. The Bombay-Goa Road is used for the transport of cashewnuts, coconuts, jackfruits, and mangoes from Konkan and Goa.

Bombay is also connected with all minor and major ports on the Western coast. They are Janjira, Shriwardhan, Harnai, Dabhol, Jaigad Ratnagiri, Vijaydurg, Malvan and Panaji on Konkan coast; Karwar, Mangalore, Calicut, Cochin and Tuticor in on West coast and Madras, and Calcutta on East coast.

The trunk airroutes originating from Bombay connect Bombay with almost all the important air-ports in the country such as Hyderabad, Cochin, Bangalore, Calcutta, Madras, Delhi, etc. Principal commodities arriving in Bombay through these airroutes consist of costly commodities, such as art silk goods, woollen and silk carpets, fur goods, readymade garments, jewellery, perfumes, essential oils, etc.

The international trade carried through Bombay Port constitutes almost two-third of the total foreign trade of Bombay. The waterways emanating from Bombay port connect Bombay with adjacent countries such as Burmah, Sri Lanka, Pakistan and Bangla Desh and also to the African countries, Australia, New Zealand, Canada, Far Eastern countries, Japan, United Kingdom, United States of America, U.S.S.R., West Germany and many other American, Asian and European countries.

A large variety of commodities arrive in Bombay port from the above mentioned countries. Some among the imported commodities are metal and metal products, motor vehicles, their parts and accessories, food grains, synthetic fibres, fertilisers, etc.

Top

CHANGES IN THE PATTERN AND ORGANISATION OF TRADE

With the changes in the socio-economic structure of Bombay, the pattern and organisation of trade has undergone many striking changes. Under the Portuguese rule the trade of Bombay was infinitesimal and was confined only to the sale of dried fish and coconuts to neighbouring coastal towns. From 1664 to 1688 Bombay gradually developed into the chief centre of English commerce with Western India. In 1757 Bombay was described as the grand store-house of all Arabian and Persian commerce. By the third decade of the 18th century, Bombay's commerce was in the most flourishing condition. During the first half of the nineteenth century, the export trade of Bombay was confined chiefly to Asian countries, and United Kingdom and after 1870 to other European countries. However, the internal trade had not received the same attention as the foreign trade at the hands of British Government. For several years after Bombay had passed into the possession of the East India Company, the internal trade of the Island of Bombay was hampered by lack of capital, external warfare, and epidemic diseases. Only since 1870, the retail trade, commission and agency business and the mill-industry have greatly developed. In the middle of eighteenth century, the traders except grain traders were free from government interference and every encouragement was ghen to fishermen, vegetable growers etc., to bring their produce to Bombay market.

The variegated changes which have occurred in the location, pattern, organization and composition of trade in Bombay since the end of nineteenth century may be the composite result of the changes in the status and composition of demand and supply of commodities, improved means of transport, technological advance, growth of banking, etc.

With the spectacular improvement in the means of transport and communications, trade is no longer confined to a limited area or to a limited variety of commodities. The improvements in the means of transport such as air-ways, had led to the opening of the new internal and external traderoutes. These increasing trade routes have increased the accessibility of Bombay with all big and small markets spread in the distant corners of the country as also with the foreign markets. As Bombay lies well away from agricultural regions, almost all the food­stuff consumed by Bombay populace is brought in Bombay from these regions. Before the opening of these various traderoutes, the external trade was mostly carried by the Bombay port; while the internal trade was carried by the rail routes of the Great Indian Peninsula Railway and Bombay, Baroda and Central India Railway and also by the inland waterways. Even then the trade was limited to specific commodities and with specific destinations but the process used to be a time consuming one.

Now, there has been a sizeable increase in the volume of trade. In keeping with this increase, the trade has become more and more organized. There has been vital changes in the organization of trade. The system of different categories of traders undertaking different trade activities and representing their trade problems through one or different trade organizations or associations, though very old, has recently gathered great momentum in Bombay. During the nineteenth century, only nine trade organizations were established in Bombay, now, there is a large number of trade associations representing almost all trading commodities.

Besides, there are export promotion councils and exporters' associations organised for undertaking various measures so as to give impetus to the exports of specific commodities. The Bombay regional office of the Trade Development Authority set up in 1970 under the control of Ministry of Commerce also helps to expand export activities,. Consumers on the other hand who play a vital role in the trade activities have also started organizing themselves to solve their own problems through societies such as Consumers' Guidance Society, Consumers' Association of India, etc.

The State Trading Corporation, with its branch office at Bombay and the Maharashtra State Co-operative Marketing Federation Limited also play a pivotal role in the trading activities in the State. The former generally organises and undertakes trading activities with other State trading branches and foreign countries in commodities approved by the Central Government; while the latter undertakes purchase and distribution of mineral oils, sale of potatoes, onions, fertilisers, etc. Bombay is also an important centre of forward trading in oils and oil­seeds such as castor seed,groundnut, cottonseed, linseed, groundnut oil, groundnut kernels, pepper and cotton.

Top

EXTENT OF EMPLOYMENT

Greater Bombay as it stands today is the financial and commercial capital of the country and the headquarters of several all India financial institutions and some of the largest industrial houses in the country. Bombay as a port helped the East India Company to a great extent in developing the overseas trade with India. After transferring its head­quarters from Surat to Bombay, the Company left nothing unturned to encourage immigration, weavers and artisans from Surat and other places were offered well paid employment, land on easy terms and financial assistance in developing their business.

Now, Bombay's accessibility to every State in the country and with foreign countries by land, sea and air has proved a potential factor in promoting industrial and commercial functions in Bombay. The erstwhile fishing village was thus destined to be the premier port of India, as it offered all the natural pre-requisites of a harbour to be able to serve the entire Western seaboard of over one thousand miles.

With the opening of new trade routes, of Greater Bombay attracted more and more people seeking employment in one or the other avenue of trade and commerce.

Trade and commerce are the important sectors of the economy from the point of view of employment also. They afford employment to a larger number of people. Having established its claim as a prominent industrial and business centre, Bombay attracts entrepreneurs from all parts of India  for establishing industrial and commercial enterprises.
According to the census returns of 1901, more than one-tenth of the total urban population was engaged in trade of one kind or another.

The number of persons engaged in trade and commercial activities of Bombay has shown a rapid increase since 1901. But due to the absence of a common method of presenting occupational data in decennial census returns, a comprehensive picture of the growth of employment in trade and commerce and the occupation wise change in the employment pattern cannot be attempted. However, the fact of increasing absorption of man power in trade and commerce can be seen from the increasing percentage of persons engaged in trade and commerce to the total working population in Bombay in the recent decennial census returns. The 1931 Census showed 93,835 or 14 per cent, as earners following trade as the principal occupation against the total of 634,895 earners then engaged in different means of livelihood. The 1961 Census recorded the number of persons engaged in trade and commerce as 3,03,817 accounting for 18 percent of the total working population which stood at 1,686,668.

The following statement throws light on the extent of employment in trade and commerce in 1961 and 1971.

The 1971 Census showed an increase in the number of persons engaged in trade and commerce and the same was enumerated at 491,515 or 22.36 per cent of the total working population of 2,198,098.

EMPLOYMENT IN TRADE AND COMMERCE IN GREATER BOMBAY

 

Category

 

1961

Persons

Males

Females

Wholesale trade

44,129

42,754

1,375

Retail trade

212,316

198,946

13,370

Miscellaneous    ..

47,372

44,969

2,403

Total    ..

303,817

286,669

17,148

 

 

 

 

 

 

1971

Category

 

Persons

Males       

Females

Wholesale trade

41,270

39,960

1,310

Retail trade

327,669

313,102

14,567

Miscellaneous

122,576

111,840

10,736

 

Total    ..

491,515

464,902

26,613

Of 368,939 persons engaged in various activities and types of trade handled in Greater Bombay in 1971, 41,270 i.e. about 11 per cent were engaged in wholesale trade and 327,669 were engaged in different types of retail trade, the details of which are shown in the table No. 11.

TABLE No. 11
Extent of Employment in Trade and Commerce in Greater Bombay, 1971

 

Particulars

Persons

Males

Females

(A)

Wholesale trade in textiles, live animals, beverages and intoxicants.

11,055

10,790

265

(B)

Wholesale trade in fuel, light, chemicals, perfumery, ceramics, glass.

6,150

6,015

135

(C)

Wholesale trade in wood, paper, other fabrics and skin and in edible oils.

5,780

5,610

170

(D)

Wholesale trade in all types of  machi­nery, equipments, including transport and electrical equipments.

3,170

3,010

160

(E)

Wholesale    trade    in    miscellaneous manufacturing.

15,115

14,535

580

(F)

Retail trade in food and food articles, beverages, tobacco and intoxicants.

1,13,821

1,05,125

8,696

.(G)

Retail trade in textiles

39,160

38,425

735

(H)

Retail trade in fuel and other household utilities and durables.

32,370

31,445

925

(I)

Retail trade in others

77,716

74,220

3,496

(J)

Restaurants and hotels

64,602

63,887

715

(K)

Financing, insurance and  Real Estate and Business Services.

1,22,576

1,11,840

10,736

Top

FOREIGN TRADE

The Bombay Customs Zone plays a major role in the foreign trade of the country. During 1965.66, the value of total imports of merchandise in and exports including re.exports from Bombay Customs Zone by sea, air and land amounted to Rs. 58,747 lakhs and Rs. 19,838 lakhs, respectively. These accounted for 41.71 percent of total imports during 1965.66 in the country and 24.62 per cent of exports from all customs zones in the country. The following statement (Directorate General of Commercial Intelligence and Statistics, Ministry of Commerce, Government of India, Calcutta.) shows the value of imports and exports to and from the Bombay Customs Zone by sea, air and land :—

(Rs in lakhs)

 

Exports (including Reexports)

Imports

Year

All Customs Zones

Bombay Customs
Zone

All Customs Zones

Bombay Customs
Zone

1965-66

80,564

19,838

1,40,852

58,747

April and May 1966

12,772

3,161

22,714

9,514

June 1966 to March 1967 .

96,723

19,283

1,67,461

64,940

1967-68

1,19,867

25,331

1,97,428

83,996

1968-69

1,35,787

37,548

1,90,863

76,777

1969-70

1,41,327

39,143

15,820

69,121

1970-71

1,53,516

53,223

1,63,420

72,728

1971-72

1,60,701

49,962

1,82,454

83,819

1972-73

1,97,053

63,781

1,86,744

82,135

1973-74

2,52,340

89,805

2,95,537

1,06,773

1974-75

3,30,414

1,20,277

4,46,810

1,26,445

+ Excludes figures in some cases for certain consignments on Government accounts.

As there was a change in the exchange value of the rupee from 6th June 1966, the figures after devaluation period are not comparable with those of the pre-devaluation period. Therefore the statistics of value of foreign trade in 1966-67 is divided into two parts—one relating to April and May 1966 and other to subsequent months from June 1966. The above cited statistics reveals that from 1967-68 to 1973-74, Bombay Customs Zone carried larger amount of imports into the country than the exports including re-exports. As against this trend, Bombay Customs Zone in the year 1974-75 recorded 28.30 per cent of imports into the country and 36.40 per cent of exports including re-expoits from the country.

Sea-borne Trade : The Port of Bombay is the keystone of Bombay's prosperity. In the matter of natural facilities for shipping, Bombay is considered as one of the most fortunate of the world's ports.

Under the rule of the Portuguese, the trade of Bombay was confined to the sale of dried fish and coconut in small quantity to the neighboring coastal towns. With the transfer of the island from the Portuguese to the British in 1665, the future of this port came to be linked with the expansion of the East India Company. Under the East India Company's rule measures for encouragement of trade were forthwith promulgated.

As early as in the first quarter of the eighteenth century, considerable attention was paid to the exportation of raw cotton. There was reduction of customs duty from 6 to 2 1/2 per cent in 1795. The port attracted continuous immigration of native traders from Surat.

The import and export trade of Bombay grew steadily from 1800 onwards, with short-lived aberrations. This is evidenced by the subjoined statement. The passing of Lord Melville's Bill in 1813 threw open the trade of India to the merchants of Liverpool, Glasgow and other great trading centers.

The following statement gives statistics of foreign and coasting trade of Bombay, 1801-02 to 1906-07 (Gazetteer of Bombay City and Island, Vol. I, 1909. p. 417.) :—

(Rs. in lakhs)

 

Year

Foreign

Coasting

Total

Total value in ..

1801-.02

1,76

2.30

4,06

Average value for decade ending .

1809-10 1819-20 1829-30 1839-40 1849-50

2,29
2,59
4,41
6,64
10,70

3,30
2,08
1,25*
1,58*
8,54

5,59 4,67 5,66 8,22 19,24

Total value in

1850-51

13,67

11,77

25,44

Average value for decade ending ..

1859-60 1869-70

19,47 48,84

6,72 8,07

26,19 56,91

Total value in ..

1870-71

40,63

5,80

4,643

Average value for decade ending ..

1879-80 1889-90 1899-00

41,54 67,54 80,57

10,45
17,52 21,12

5,199
8,506
10,169

Total value in ..

1900-01

69,73

25,47

95,20

Average value for period ending  .

1906-07

95,77

23,34

1,19,11

* Complete figures for the coasting trade of these two decades are not available.

The following statement shows the progress of imports and exports in merchandise and treasure with foreign countries from 1801.02 to 1900.012:—

The following statement shows the progress of imports and exports in merchandise and treasure with foreign countries from 1801.02 to 1900--01(Gazetteer of Bombay City and Island, Vol I, 1909, pp. 418.19,):—

(Rs. in lakhs)

Imports
Exports
Merchandise
Treasure
Total
Merchandise
Treasure
Total
Foreign
Indian
Total
Total value in 1801-1802
72
22
94
..
..
80
1
81
Total value in 1850-1851
4,54
2,36
6,90
..
..
6,60
16
6,76
Total value in 1870-1871
11,52
3,31
14,83
..
..
24,82
97
25,79
Total value in 1900-1901
26,34
976
36,10
..
..
27,16
6,46
33,62

The import trade of Bombay upto 1869.70 was confined chiefly to the United Kingdom, China and the Persian Gulf, though there was some trade with France, Germany and Portugal. Owing to the abolition of the East India Company's monopoly and the opening of the Suez Canal (1869), the current trade from 1870 showed a disposition to return gradually to the channels used before the discovery of the passage round the Cape. Trade with the Mediterranean cities started increasing. London still retained its supremacy and monopolised about 60 per cent of the trade of the Indian Empire, but Trieste, Venice, Geneva and Marseilles were important commercial rivals. During the last quarter of the 19th century, there was a slow rise in the trade with Italy, Austria, Hungary, Belgium and Germany. Japan emerged as an important trading country with Bombay at the opening of this century. Among African ports, Mauritius alone was an important exporter of sugar to Bombay. America, which possessed practically no trade with Bombay till 1879.80, acquired a share aggregating at successive periods since that date to Rs. 22, 34 and 56 lakhs.

During the first half of the nineteenth century the export trade of Bombay was confined chiefly to Asian countries and the United Kingdom but subsequent to 1870 other European countries headed by France, commenced to acquire an increasing share. The value of these shares at successive periods is shown below :—

Country
1870-71 to 1879-80
1880-81 to 1889-90
1890-91 to 1899-1900
1900-1901 to 1906-07
France 180 452 456 394
Belgium 5 229 267 314
Germany 13 36 199 262
Italy 74 275 212 229
Austria-Hungary 91 173 137 156
Spain 4 20 13 43
Holland 13 25 45 39

The chief articles imported from foreign countries in Bombay comprised cotton piece-goods from the United Kingdom, America, Belgium, Germany and Holland; and silk manufactures from United Kingdom, France, Italy, Austria, Hungary and China. Machinery and mill requirements as also woollen manufactures were mainly imported from the United Kingdom, while raw silk was brought from China, Persia and the Straits Settlements. Sugar was imported to Bombay from Mauritius, Austria, Hungary, Germany, United Kingdom, France, Belgium and Java Metals were mainly imported from the United Kingdom. Kerosene and petroleum were imported from America and Russia, while liquors came mainly from the United Kingdom, France, Germany and Belgium.

At the beginning of this century raw cotton Was exported from Bombay to Japan and the United Kingdom. Cotton twist and yarn were exported to China and cotton piece-goods to Gulf countries and Africa. The British Government had prohibited the import of Indian piece-goods in Great Britain with the motive to assure protection to the British cotton textile industry. This measure hampered Indian economic interests and adversely affected the textile industry in Bombay. The other articles exported from Bombay were wheat, oil-seeds, raw wool, opium, etc.

The history of Bombay in the second half of the nineteenth century is a remarkable record of progress in every direction. Railway communication with the interior was opened up in 1853. Steam coastal ferry services were inaugurated in 1866. Six cotton mills commenced working between 1854 and 1860. Bombay had become the cotton market of Western and Central India. The opening of the Suez Canal for traffic in 1869 revolutionised the maritime trade of Bombay. Besides, the year 1858 witnessed the exit of the East India Company after a chequered career of about two and half centuries and Bombay passed under the direct rule of the British Crown.

As a result of all these developments, there was a remarkable upward swing in the trade of Bombay Port. The demand for Indian goods from distant markets coupled with the impact of improved internal communications brought about a rise in imports and exports.

The traffic handled at Bombay Port since 1900-1901 showed a steady increase till 1913-14. The increase was more remarkably recorded in exports and by 1913-14, the quantity of exports was twice the quantity exported at the turn of the century. Imports, however, fluctuated around 2.6 million tonnes and the total value of imports and exports increased from Rs.53 crores in 1900-01 to Rs.95 crores by 1909-10 and to Rs.1,32 crores by 1913-14. During World War I, the imports declined, while the exports recorded a substantial increase. With the end of the War, the traffic declined sharply, but after the initial decrease, the value of imports and exports again picked up rapidly exceeding the pre-war levels.

Another achievement of the Port Trust in the pre 1914 period, was the construction of B.P.T. railway which was commissioned with effect from 1st January 1915. Before the commencement of the Port railway, the bulk of the traffic had to be conveyed from ship to rail and vice versa by cumbersome and expensive method of transportation by bullock carts which involved double handling and storage.

The volume of trade handled by B.P.T. Railway declined from 5.02 million tons in 1913-14 to 4.01 million tons in 1915-16 and then stood at 4.15 million tons in 1918-19. Even though, the declining trend existed for a short while after the termination of the War in November 1918 the traffic picked up rapidly and the figure for 1919-20 rose to 6.25 million tons. The increasing trend in the volume of trade was maintained till 1929-30, when it reached 6.69 million tons.

The interregnum between the two World Wars witnessed a substantial increase in the volume of traffic handled at the Port. The volume of imports well exceeded over three million tons a year between 1920-21 and 1929-30, however, the volume of exports showed a decreasing trend. It was succeeded by the world-wide depression of the early thirties which resulted in the contractions of the world trade and had its adverse effect on the imports-exports handled at the port. The volume of trade, both imports and exports, dropped to 4.7 million tons in 1932-33 from 6.7 million tons in 1929-30 and then fluctuated approximately to the level of 5.4 million tons till 1939-40. But the decline in exports was more severe than in imports.
The onset of World War II, did not immediately lead to the revival of traffic as had happened at the time of World War I. However gearing up the defence efforts along with the revival of industrial activity to meet the needs of the defence led to the revival of trade handled at the Port to the earlier level of 6 million tons from 1941 onwards. With the entry of Japan into the War and her occupation of Burma, the Bay of Bengal was virtually closed to shipping. This resulted in the diversion of country's sea borne trade to the West Coast ports of Bombay, Karachi and Cochin. As these ports were not well-equipped to handle all the additional traffic this led to acute congestion and serious delays in the Bombay Port in 1943-44. The cessation of the War in Europe in May 1945 brought some relief to the Port traffic.
The partition of the country which accompanied the attainment of Independence in 1947 necessitated a total reassessment of the Port schemes not only for rehabilitation but also for expansion and modernisation, as much of the trade formerly handled at Karachi was diverted to Bombay Port. The long-term schemes for the development of port facilities and provision of equipment were integrated with the first and subsequent Five-Year Plans.
During 1947-48, the rupee value of exports from Bombay Port stood at about 80 crores which increased to about Rs. 1,81 crores in 1950-51. During the year 1950-51, the value of exports of cotton manufactures stood at the highest, as the same accounted for 56- 40 per cent of the total value of exports.
The tables No. 12 and 13 indicate the value of principal articles of Indian produce and manufactures, exported from Bombay port and principal articles imported into Bombay port from foreign countries.

 

 

TABLE NO 12

PRINCIPAL ARTICLES EXPORTED FROM BOMBAY PORT TO FOREIGN COUNTRIES
(Statistical Abstract of Bombay State, 1952.)

Articles

Total Exports (Rs.)

 

 

1948-49

1950-51

Percentage to total exports during 1950-51

1

2

3

4

Cotton manufactures

21,07,76,667

1,02,14,75,161

56.40

Seeds

3,22,72,450

11,26,35,744

6.22

Cotton wasts

4,30,21,012

10,36,48,098

5.72

Oils

3,30,40,984

9,10,22,523

5.03

Cotton-twist and yarn

76,56,329

7,74,25,831

4.28

Spices

1,97,88,944

6,89,37,171

3.81

Cotton-raw

13,67,40,853

4,64,11,428

2.56

Wool-raw

1,05,22,082

3,55,84,736

1.98

Hides and raw-skins

86,13,161

1,92,30,426

1.06

Metals and ores

1,12,74,405

1,82,87,124

1.01

Gums and resins

77,49,550

1,72,04,349

0.95

Tobacco

1,86,35,525

1,70,69,396

0.94

Postal articles

1,06,22,639

1,47,61,395

0.82

Opium

7,83,360

1,39,08,635

0.77

Fruits and vegetables

43,30,488

1,23,51,244

0.68

Haberdashery and millinery

17,75,870

1,21,39,637

0.67

Leather

68,03,084

1,00,13,840

0.55

Tea

1,23,99,775

92,13,343

0.51

Wool manufactures

58,63,662

91,23,818

0.50

Other textile manufactures

5,14,18,007

86,77,595

0.48

Apparel 

58,85,768

82,82,041

0.46

Rubber manufactures

52,32,255

74,15,666

0.41

Drugs and medicines

53,80,800

62,51,056

0.35

Manures

14,59,181

62,24,461

0.34

Bristles

57,13,928

43,62,884

0.24

Chemicals

31,46,129

40,94,402

0.23

Wood and timber

34,83,345

34,44,241

0.19

Provision and oilmen's Stores

64,84,069

33,21,684

0.18

Art works

9,95,969

31,47,437

0.17

Myrobalans

11,95,383

24,51,472

0.14

Fish (except canned fish)

19,51,410

23,86,489

0.13

Dyeing  and  tanning substance except myrobalans.

6,67,066

21,65,154

0.12

Hemp-raw

7,98,398

12,26,928

0.07

Soap

46,07,153

2,88,001

0.02

Oil-cakes

3,53,852

2,41,334

0.01

Grain, pulse and flour

 

N.A.

 

Jewellery (excluding imitation jewellery etc. also plates of gold and silver).

 

N.A.

 

Other articles

4,47,23,403

3,65,42,804

2.00

Total

72,61,66,957

1,81,09,67,548

100.00

TABLE No. 13
Principal Articles Imported into Bombay Port from Foreign Countries
(Statistical Abstract of BombayState, 1952.)

 

Total Imports

Percentage to total imports during 1950-51

Articles

1948-49

1950-51

 

Rs.

Rs.

 

1
2
3
4

Cotton-raw

55,53,00,505

90,97,59,959

27.96

Oils

 21,13,61,455

26,76,95,995

8.23

Machinery and mill work

 33,12,36,301

42,17,74,476

12 96

Grain pulse and flour

37,75,99,927

27,21,82,036

8.37

Metals and ores

15,43,55,158

21,22,67,721

6.52

Artificial silk

11,72,95,459

13,94,98,500

4.29

Dyeing and tanning substances .

11,93,13,806

11,82,80,950

3.64

Motor cars and motor cycles, etc

14,77,87,258

10,68,13,371

3.28

Instruments and apparatus

9,69,19,183

9,50,54,110

2.92

Drugs and medicines ..

5,23,49,726

6,65,99,400

2.05

Fruits and vegetables ..

4,03,09,573

5,43,87,711

1.67

Paper and paper board

7,55,74,511

5,38,80,508

1.66

Postal articles not specified

3,03,12,459

1,36,82,154

0.43

Chemicals and chemical preparations.

10,25,30,683

5,25,01,040

1.61

Manures (excluding oil.cakes) ..

82,36,337

4,15,22,497

1.28

Wool-raw

2,36,93,901

3,52,13,777

1.08

Hardware

3,47,08,528

2,67,37,928

0.82

Provision and oil-men's store .

2,87,92,969

2,50,28,086

0.77

Spices

1,68,55,711

2,20,28,387

0.68

Starch, dextrine and ferina

2,10,27,192

2,18,69,365

0.67

Aircrafts and parts thereof

1,97,33,833

2,00,87,851

0.62

Rubber

59,12,063

1,71,15,851

0.53

Cycles and parts thereof

2,35,26,236

1,48,80,597

0.46

Wool manufactures including yarn and Knitting wool.

5,62,81,261

1,46,36,162

0.45

Seeds
73,27,099
1,39,01,845
0.43

Silk-raw (including waste)

1,00,45,894

1,38,14,629

0.42

Cotton manufactures..

8,25,37,963

1,35,36,170

0.42

Staple fibre yarn

5,146

1,34,54,601

0.41

Clocks and watches
2,00,86,500
97,52,486
0.30

TABLE No. 13—contd.


 

Total Imports

Percentage to total imports during

Articles

1948-49

1950-51

1950-51

1
2
3
4

 

Rs.

Rs.

 

Arms and ammunitions, etc.

25,14,536

1,32,29,064

0.41

Wood and timber

1,44,53,431

78,51,328

0.24

Belting for machinery

1,05,82,528

67,97,724

0.20

Gums and resins

93,11,795

61,69,788

0.19

Liquors

1,18,30,861

60,66,720

0.19

Precious stones and pearls, unset

68,92,765

56,29,983

0.17

Paints and painters' materials  

1,42,64,462

56,56,479

0.17

Tallow and stearine

37,82,029

54,77,524

0.17

Leather and manufactures thereof

73,78,557

50,17,878

0.15

Building and engineering material

97,94,603

43,27,735

0.13

Glass and glassware..

1,00,12,573

36,58,551

0.11

Carriages and wagons and parts for railways.

13,17,487

37,33,293

0.11

Books and printed material

46,34,684

34,04,083

0.10

Tobacco

81,07,424

27,85,836

0.09

Sugar  

5,303

27,95,129

0.09

Stationery

56,57,549

26,77,197

0.08

Bobbins

67,13,735

24,44,868

0.08

Earthware and porcelain

15,25,267

14,90,451

0.05

Silk manufactures including silk yarn  

52,28,893

14,45,382

0.04

Cotton twist and yarn

1,68,62,107

8,72,725

0.03

Toilet requisites

25,02,993

7,30,386

0.02

Apparel

11,37,265

6,59,730

0.02

Animals living

2,95,344

6,04,257

0.02

Toys and requisites for games

9,09,053

2,98,840

0.01

Fents being bona fide remnants of piecegoods or other fabrics.

20,66,850

1,71,923

0.01

Haberdashery and millinery

5,12,814

1,53,616

 

Tea

 

 

 

Other articles

8,87,01,080

7,11,40,465

2.19

Total

3.01,80,12,665

3,25,32,49,118

100.00

Since Independence, there had been a continuous lise in the traffic handled by the Bombay Port upto 1967-68, which was mainly due to setting of two oil refineries at Bombay and the commissioning of the Marine Oil Terminal in 1954-56. From 7.00 million tonnes in 1950-51, on the eve of the launching of the First Five Year Plan, the traffic reached the peak figure of 18.27 million tonnes in 1966-67. The rupee value of the traffic passing through the Port also increased from 511.48 crores in 1950-51 to Rs. 953.82 crores in 1968-69.

The figures of imports and exports (coastal and foreign combined) handled at the Port including docks and bundars in certain selected years are given below (The Port of Bombay, a Brief History, Bombay Port Trust.):—

Year

Imports

Exports

Total figures in Million D.W. Tonnes (i.e., '0000 ommitted)

1

2

3

4

Pre-Independence

1938-39

3.26

1.92

5.18

1946-47

3.84

1.52

5.36

Post-Independence

1947-48 

4.76

1.71

6.47

1950-51

5.27

1.73

7.00

1955-56

6.81

3.66

10.47

1960-61

10.79

3.93

14.72

1965-66

12.97

5.14

18.11

1966-67

13.23

5.04

18.27

1968-69

12.10

4.31

16.41

1969-70

11.43

3.60

15.03

1970-71 

10.86

3.54

14.40

1971-72

12.43

3.70

16.13

1972-73

12.32

3.22

15.54

1973-74

14.25

4.28

18.46

Bombay port handles the maximum import traffic in the country and in the quantum of exports, it is next only to Marmagoa. The same can be proved with the help of 1967 figures of imports and exports. During 1967, the quantum of imports in Bombay Port accounted for 40.20 per cent of the total quantum arrived in all the ports in the country, while the quantity of exports during the same year from the port accounted only for 6.92 per cent of total seaborne exports. In terms of value during the same year Bombay Port handled about 26 per cent of the total traffic of major ports in India. A noticeable change has occurred in the composition of the trade and the Port now handles a much larger variety of cargo, than it had handled in the past.

An examination of the composition of traffic shows that the traffic of petroleum oil and lubricants has gone up considerably since 1954-55 and constituted on an average, in 1966-67 about 55 per cent of the total traffic of the Port. Increased demand for fertiliser products has been responsible for the increased imports of fertiliser raw materials, like crude sulphur, urea, rock phosphate, etc. The other main items which have contributed to the increase in the traffic of imports consist of iron and steel and machinery for plan projects, foodgrains, building materials and chemicals. The items of export are oil.cakes, iron scrap and dross, sugar, iron and steel and manganese ore.

From 1966-67 to 1970-71 the traffic of the Port, however declined mainly due to four reasons. The main reasons for the decline were the decline in the coastal exports of petroleum, oil and lubricants consequent upon the setting up of oil refineries elsewhere in India; decline in iron and steel imports consequent on the growth of indigenous production; decline in imports of foodgrains as a result of 'Green Revolution' in India and the virtual disappearance of the iron ore traffic from the Port as a result of the development of other ports for ore export.

The following statement shows the value and volume of exports and imports through Bombay Port during 1964-65 to 1971-72 (The Directorate General of Commercial Intelligence and Statistics, Ministry of Commerce, Government of India, Calcutta.):—

 

Year

Exports (including re.exports)

Imports

Gross weight (tonnes)

Value (in thousands of Rs.)

Gross weight (tonnes)

Value (inthousands ofRs.)

(1)

(2)

(3)

(4)

(5)

1964-65

2,124,365

N.A.

6,771,142

N.A.

1965-66

1,560,672

N.A.

5,057,673

N.A.

1966-67

2,220,389

2,095,298

8,418,040

7,053,111

1967-68

1,181,674

1,816,659

4,633,182

7,448,150

1968-69

1,844,012

2,975,679

8,229,138

6,562,555

1969-70

1,638,283

2,992,931

4,043,624

6,162,750

1970-71

1,854,924

4,196,847

2,519,570

6,255,691

1971-72

1,384,670

3,739,859

3,603,899

8,433,326

Region-wise imports into and exports from Bombay Port (docks and bundars combined) to foreign countries excluding overside and coastal traffic based on audited returns are shown in table Nos. 14 and 15 given at the end of the chapter.

The percentage of exports from Bombay Port to some of the countries, in the years 1975-76 and 1980-81 is shown below:—

Commodities exported to

Percentage of exports

1975-76

1980-81

(1) Japan

6.00

2.17

(2) U.S.A.

5.37

3.70

(3) U.K.

7.50

2.41

(4) Far Eastern countries

7.07

8.96

(5) African countries

8.75

4.66

(6) Other Asian countries

33.61

29.40

(7) Other European countries

18.04

14.70

(8) U.S.S.R.

2.80

9.24

The year 1980-81(Annual Administration Reports 1975-76 and 1980-81, Bombay Port Trust.) recorded 26,01,700 metric dead weight tonnes of exports from the Port to foreign countries including adjacent countries (excluding coastal traffic) and 1,16,09,100 metric dead weight tonnes of imports into Bombay Port from other countries excluding coastal traffic.

Out of the total volume of exports from the Port to foreign countries during 1975-76, fertilisers accounted for 20.06 per cent; whereas sugar, accounted for 15.52 per cent; metal and metal products,11.46 per cent; fruits and vegetables, 5.12 per cent; and oil.seeds 2.74 per cent. The corresponding percentages for 1980-81 were 1.3, 1. 00,9.70, 6.15 and 0.35 respectively.

Of the total imports into Bombay Port from foreign countries during 1975-76, foodgrains and other foodstuffs constituted 19.05 per cent, chemicals constituted 9.52 per cent and metal and metal products constituted 3.10 per cent of total imports. The corresponding percentages for 1980-81 were 0.7, 5.28 and 15.47, respectively.

The percentage of imports from some of the countries to total imports in Bombay Port is shown below :—

Country
Percentage to total imports of the year
1975-76
1980-81

1.

Group of other Asian countries

61.16

42.95

2.

U.S.A.

16.84

7.46

3.

Other European countries ..

7.58

11.67

4.

U.S.S.R.

4.20

2.86

5.

Japan

2.90

3.81

6.

Canada

2.48

4.11

7.

U.K.

0.93

1.81

8.

Other American countries ..

0.87

2.08

9.

West Germany

0.86

3.61

10.

Miscellaneous

0.60

4.92

11.

Far Eastern countries

0.53

6.35

12.

Australia and New Zealand

0.43

1.25

13.

African countries

0.42

0.93

14.

Pakistan  ..

0.19

1.09

Air-borne Trade : Next to sea routes, airways play an important role in the foreign trade of the country. The main gateways for export by air from the country are the international airports at Bombay, Calcutta, Delhi and Madras. In the trade of Bombay with foreign countries, the Bombay Airport accounts for small amount of foreign trade. Though the quantity of trade handled by the airport is very small than that of the Bombay port, the variety and the value of commodities handled by the airport are very important. The principal commodities exported through the airport (International) are pearls and piecious stones, developed cine films, pharmaceutical products, textile products, crude minerals—mainly mica, clothing excluding furs, vegetables, fresh fruits, etc.

Some of the commodities are very costly in relation to bulk and can stand the high cost of air freight, such as pearls and piecious stones, developed cine films, pharmaceutical products, etc. Some of the commodities exported by air are perishable and hence need to be moved rapidly such as vegetables and fresh fruits. Some of the commodities exported by air are seasonal and fashionable goods e.g. textiles, and clothing and are therefore subject to great loss in value if they do not reach their markets in proper time. Besides, there is a group of commodities generally listed as others, which include electronic equipment, machine tools,and machinery parts. These commodities on some other criteria justify the higher cost of air freight or demand for the speedy shipment, such as saving on inventory cost, the quick need for a replacement part of machine to minimise the duration of shut downs, saving on packaging or insurance, etc.

During the year 1967, among the four major international airports, Bombay airport accounted for 62 per cent of the value of the total foreign exports and 58 per cent of the value of total foreign imports by air. The value of total foreign exports from Bombay airport amounted to Rs. 3,096 lakhs as against the total value of foreign exports through all the airports in the country which amounted to Rs. 5,011 lakhs. The value of foreign imports at Bombay airport during the same year stood at Rs. 1,788 lakhs; as against Rs. 3,087 lakhs as the total value of foreign imports through all the international airports in the country.

Since 1970-71 onwards, the total exports including re-export and total imports from Bombay airport showed an increasing trend.

The following statement gives value of foreign imports and exports (including re.exports) handled through Bombay airport:—

(Rs. in lakhs)

Year
Exports (including re-exports)
Imports
1970-71
5,688
5,031
1971-72
6,201
6,190
1972-73
10,949
9,155
1973-74
15,790
14,275
1974-75
22,493
14,412

During 1974-75, the total foreign exports by air from Bombay airport accounted for about 18 per cent of the total foreign exports including re-exports and 11 per cent of the total foreign imports by sea, air and land.

Export Credit and Guarantee Corporation : With a view to augmenting the foreign exchange resources of the country for the implementation of the development plans, several export promotion measures were contemplated by the Government of India in the immediate post-Independence period. Among many other export promotion measures, the introduction of a scheme of export credit insurance which had contributed signi­ficantly to the expansion of the export trade of the industrially advanced countries was considered by a committee appointed by the Government in 1956. The committee in its report concluded that the provision of export credit insurance facilities would considerably strengthen the hands of our exporters in developing new export markets for India's products. Besides, this facility would also assist exporters in securing the required finance facilities from banks in the country. The recommendations of the committee regarding the introduction of the credit insurance scheme were implemented by the Government which resulted in the setting up of the Export Risks Insurance Corporation Limited, as a fully Government owned company.

The study group on export finance set up by the Government of India in 1962 recommended the transformation of Export Risks Insurance Corporation into the Export Credit and Guarantee Corporation and the transformation accordingly took place on the 15th of January 1964. The Export Credit and Guarantee Corporation (ECGC) is a credit insurance organisation established to encourage, facilitate and develop India's export trade. It provides a service which is not available from commercial companies. Briefly stated, the objective of the Corporation is to improve the capacity of Indian exporters to sell in the international markets and also ensure that banks are enabled to lend more liberally and with less risk for financing exports.

The main functions of the Corporation include issue of insurance policies to Indian exporters to protect them against losses that they may suffer in the event of certain commercial and political risks blocking or delaying the receipts of payment for goods or services exported. It also furnishes in India on a liberal basis the pre.shipment and post-shipment credit facilities needed by them to maintain and expand their export trade.

The Corporation has a branch at Bombay besides the branches at Calcutta, Delhi and Madras and a field office at Cochin. The Corporation is under the administrative control of the Ministry of Foreign Trade. It has introduced a wide range of insurance policies for exporters covering the commercial and political risks inherent in export on credit terms, as well as a number of guarantees to banks on behalf of exporters to piovide a more easy and liberal flow of finance for export transactions.

In order to help the small exporters the Corporation agrees to cover banks upto 90 per cent of the risk under its packing credit guarantee as against the normal coverage of 66 2/3 per cent. The business of the Corporation has grown at a rapid pace over the years. The branch office of the Corporation at Bombay was established at the end of 1970. Besides the area of Greater Bombay, the branch also covers the area of the whole of Maharashtra, Gujarat, Madhya Pradesh and Goa, Daman and Diu. The growth in the business of the Bombay branch under policies and guarantees since 1973 is shown in the following statement:—

Year

 

 

No. of policiesissued during theyear

Maximum liability in respectof policies issued (Rs. in crores)

No. ofpoliciesin force

Maximum liability in respect of policies in force at the endof the year (Rs. in crores)

Risk value (Rs. incrores)

 

Premium income(Rs. incrores)

1

2

3

4

5

6

7

Policies

 

 

 

 

 

 

1973

791

37

1,514

65

64

19

1974

862

46

1,645

89

83

24

1975

875

45

1,756

102

152

43

1976

1,204

66

2,033

126

199

54

Guarantees

 

 

 

 

 

 

1973

1,461

72

1,145

42

552

69

1974

1,301

74

908

47

742

92

1975

1,127

63

837

51

1,028

86

1976

1,170

66

629

57

1,331

97

Export Promotion Councils : A number of export promotion councils have recently been established with a view to assisting in the promotion of export of specific commodities. The main functions of these councils are to conduct market surveys, arrange exhibitions, propaganda and publicity and liaison between trade and government, as also to send trade delegations abroad. The following export promotion councils have either their head offices or branch offices in Greater Bombay :—

    • Basic chemicals and pharmaceuticals and soaps export promotion council ;
    • Chemicals and allied products export promotion council;
    • Cotton textile export promotion council;
    • Engineering export promotion council;
    • Export promotion council for finished leather, leather manunfactures;
    • Gem and jewellery export promotion council;
    • Plastics and Linoleums export promotion council;
    • Silk and rayon textiles export promotion council;
    • Wool and woollen goods export promotion council.

    The information about some of these export Promotion councils is given below :—
    (i) Plastics and Linoleums Export Promotion Council : The Council then known as the Plastics Export Promotion Council was formed in June 1955. In 1958, linoleums were brought under the purview of the council and it came to be known as the Plastics and Linoleums Export Promotion Council. The head.office of the Council is at Bombay with regional offices at Calcutta and Madras.
    The council had 675 members in Greater Bombay (January 1977). It is associated with the following organisations for the varied services rendered by them :—

    1. The Federation of Indian Export Organisation, Delhi,
    2. Indian Institute of Foreign Trade, New Delhi,
    3. Indian Council of Arbitration,
    4. Indian Standards Institution, New Delhi,
    5. Western India Shippers' Association, Bombay,
    6. Eastern India Shippers' Association, Calcutta and
    7. Indo. Yugoslav Chamber of Commerce, Calcutta.

    It has three elected committees, one each for three regions to look after the admissions of members and exporters' interest in the respective region. There are in all 13 commodity-wise panels comprising major exporters in Bombay functioning in the Council. These panels are for the commodities such as plastic spectacle frames, plastic bangles, moulded and extruded goods, PVC fabricated goods, plastic laminates, fountain pens, electrical accessories, PVC leather cloth, HDPE woven sacks, plastic imitation jewellery, PVC pipes, PVC footwear and thermosetting raw materials.

    The prices are determined every quarter by a price fixation committee for each raw material. The members of these committees comprise the raw material suppliers, processors and Government nominees. The price fixation committees are working for poly-vinyl chloride, high density polyethylene, low-density polyethylene, polystyrene, urea formaldehyde and phenol formaldehyde.

    The ultimate objective of the council is to increase export worth Rs.50 cores per annum from 1978-79 onwards. This will however, depend largely upon the commissioning of the plastic raw material plants at the Indian Pharmaceuticals Ltd. at Baroda. The Council has already created many markets abroad to absorb the output by sending annually 20 to 30 manufacturers and exporters under assistance from the Marketing Development Fund and other institutions.

    The data for expoit marketing is collected from the reports of India's missions abroad, financial papers, overseas professional journals, and institutions like the Directorate General of Commercial Intelligence and Statistics, Trade Development Authority, Indian Institute of Foreign Trade, International Trade Centre, Customs etc. The service for overseas buyers is rendered thiough an overseas journal, commodity folders, and brand catalogues in the principal foreign languages.

    The approximate total value of expoits of the selective firms in Bombay who are the regular exporters of the Council is as follows :—

    (In crores of Rs.)

     

    Value of exports of the

    Year

    regular exporters in

     

    Bombay

    1971-72

    3.09

    1972-73

    3.71

    1973-74

    6.96

    1974-75

    8.80

    1975-76

    9.31

    The exports of the regular exporters in Bombay accounted for almost fifty per cent of the total exports of the Council.

    The major export commodities of the council are plastic, electrical accessories plastic imitation jewellery, moulded and extruded goods, gramophone records, PVC pipes and special PVC sheeting, jute based linoleums, plastic bangles, spectacle frames, polylined jute, etc.

    The new items exported and the items which had dropped out but made their appearance again in 1974-75, 1975-76 were PE film sheets and bogs, vinyl asbestos floor tiles, polyurethane foam and its products and dolls and toys. The commodities are exported by sea and air.

    Dubai, Nigeria, Saudi Arabia, U.K., Bulgaria, Czechoslovakia, Iraq, Poland, U.S.A., and U.S.S.R. are some of the major export markets which import the commodities exported through the Council.

    The new markets which entered in the list of the Council during 1974-75, and 1975-76 were Botswana, Buima, Burundi, Dahomey, Iceland, Mozambique, South Korea and Ruwanda. On the other hand, the Council lost the markets of Brazil, Egypt, Laos, Sudan, Vietnam, Yugoslavia and Zaire during the same years.

    During 1973-74, of the 18 top exporters listed by the Council, 14 were from Bombay; while during 1974-75, of the 15 top exporters listed by the Council, 12 were from Bombay. The Council during 1975-76 participated in two specialised exhibitions abroad viz., OPTICA-75 and K-75. The former was a specialised exhibition for the optical industry held at Wiesbaden in which one firm of Bombay participated and the latter was International plastics and rubber exhibition held at Dusseldorf—in which 17 member firms from Bombay participtaed.

    (ii) Engineering Export Promotion Council: The regional office of the Council was opened at Bombay in 1959 with main objectives to support, protect, maintain, increase and promote the exports of engineering goods. The Council has been highly instrumental in achieving an objective of increasing and promoting the export of engineering goods.
    The Council's leading member enterprises have the requisite capabi­lities to provide turn key jobs and to undertake major engineering construction works not only in the country but also abroad. During 1976, there were as many as 1,289 ordinary members and 968 associated members in the regional office at Bombay. These members represent Maharashtra and Gujarat States. The commodities exported by the Bombay office may be grouped broadly under four categories viz., (i) capital goods comprising textile and jute mill machinery and fabricated steel structural, wires of cables etc., (ii) primary steel and pig iron, (iii) non.ferrous products, and (iv) consumer durables comprising diesel engines, pumps, etc. Most of the commodities are exported by sea.route and air. South-Cast Asia has been the biggest market for engineering goods exported through the Council. Exports to the Continent of Africa have been growing at a steady pace. Some of the markets where engineering products have been supplied in large quantities are Nigeria, Tanzania, Kenya, Zambia and Zaire.

    The export performance of the member firms in Bombay during 1973-74, 1974-75 and 1975-76 was of the value of Rs. 6,931.49; Rs. 9,514.47 and Rs. 77,136.65 lakhs, respectively.

    The exports of 29 member.firms of the Council in Bombay for the supplies made to the projects in India during 1973-74,1974-75 and 1975-76 amounted to Rs. 541.80 lakhs; Rs.541.25 lakhs and Rs.11,86.32 lakhs, respectively.

    State Trading Corporation: The State Trading Corporation was registered in May 1956 under the Companies Act, 1956 as a private company with the capital of Rs. one crore and a paid-up capital of Rs. five lakhs which was subsequently raised to Rs. two crores. As a private limited company, the State Trading Corporation was acting as the agency mainly for exporting mineral ores such as iron ore, manganese ore, etc.; and some consumers goods such as woollen fabrics, shoes, salt and jute goods to foreign countries. It also used to undertake imports of manufactured articles like nonferrous metals, steel, chemicals, fertilisers, etc. In pursuance of the decision of Government of India, another private company viz.; Minerals and Metals Corporation of India was registered in September 1963, for undertaking the exports from India of mineral ores and imports into the country of semi.manufactured articles and allied commodities. The company took over the business and trade activities of the State Trading Corporation of India Ltd., pertaining to minerals, ores and other allied metal products from October 1963.

    The declared purpose of the State Trading Corporation, when it was set up in May 1956, was to organise and effect exports from and imports into India of all such goods and commodities as may be determined by the company from time to time, and to undertake the purchase, sale and transport of in such goods and commodities in India or anywhere else in the world.

    The State Trading Corporation has its head office at New Delhi and 24 branch offices all over India including one at Bombay and 18 overseas offices.

    The objectives of the Corporation were subsequently enlarged from time to time to cover a much wider field. Its present main objectives cover (i) developing foreign trade, particularly exports by expanding existing markets and exploring new ores; (ii) organising trade with the State Trading countries; (iii) handling export and import of bulk commodities essential for the economic and industrial development of the country by the system of commodity exchange under barters, and link deals; (iv) supplementing private trade in spheres where private trade has a difficulty in functioning effectively; (v) undertaking import and distribution of commodities in short supply; (vi) undertaking price.support and buffer-stock operations in specific commodities with high export potential; and (vii) undertaking processing, conversion and manufacture of exportable products.

    Now, the group of State Trading Corporations consists of State Trading Corporation, Project and Equipment Corporation of India Ltd.; Handicrafts and Handlooms Export Corporation of India Ltd., Cashewnut Corporation of India Ltd., State Chemicals and Pharmaceuticals Corporation of India Ltd., and Central Cottage Industries Corporation of India Ltd.

    The Project and Equipment Corporation of India Ltd., is engaged in activities pertaining to marketing of engineering and railway equipments; while the Handicrafts and Handlooms Corporation of India Ltd., is entrusted with the export of handicrafts and handlooms from India and the Cashewnut Corporation of India Ltd. handles the imports of cashewnut into India.

    The State Trading Corporation as the main agent acting in foreign trade of the country is divided into two divisions viz,, commodities division and advisory and services division.

    The total sales by Bombay branch of the Corporation amounted to Rs. 215.59 crores during 1974-75. The same included imports, exports as also domestic sales.

    The total exports of Bombay Branch (Source.—STC-Group Performance Budget,  1974-75 and Performance Reviews, 1973-74, State Trading Corporation.) of State Trading Corporation amounted to Rs. 88.80 crores during 1974-75. Of this, the exports of oils and fats accounted for the highest i.e. Rs. 27.50 crores; while the exports of leatherware amounted to Rs.17.50 crores. The exports of other articles viz., textiles, food, general products, chemicals and drugs amounted to Rs. 9.00 crores, Rs.1.41 crores, Rs.1.15 crores, Rs. 57 lakhs and Rs. 55 lakhs, respectively. The total exports of Bombay branch were 23 per cent of the total exports by the State Trading Corporation.

    The imports by the Bombay branch amounted to Rs.1,26.21 crores, and accounted for 46 per cent of the total imports by the State Trading Corporation. The imports of different commodities by the Bombay branch during 1974-75 are given below:—

    (Rs. in crores)

    Imports

    1974-75

    Chemicals I (Plastics and Petrochemical)

    14.50

    Chemicals II (Rubber, soap etc.)

    14.56

    Drugs and Pharmaceuticals

    16.77

    Oils and Fats

    49.22

    Foods  

    0.88

    Agricultural Produce

    0.90

    Textiles I (Natural Fibres)

    3.50

    Textiles II (Nylon Yarn etc.)

    12.37

    General Products (News print and syntheti c rubber)  

    15.88

    Industrial  Raw Materials Assistance Centre(IRMAC).

    1.13

    Total ..

    1,29.71

    The domestic sales by the branch included only the sale of imported cars and the same amounted to Rs. 58 lakhs during 1974-75.

    Top

INLAND TRADE

The total domestic trade of Bombay includes the merchandise brought from the hinterland for export as also for domestic consumption.The physical facilities available for the movement of export cargo from originating centres to the port are the same as those for the doiriestic movement of goods and passengers, except in case of ores.

While road and rail play an important role in the movement of export cargo from Bombay, two other modes of transport viz., airways and coastal shipping are also used for export cargo.

The following statement shows percentage (Survey of Domestic Transport of India's Export Cargo, Vol. II, May 1971, Operations Research Group, Baroda.) distribution of export cargo of all commodities to Bombay port during 1969-70:—

By value
By weight
Road
Rail
Inland water ways
Others
Road
Rail
Inland water ways
Others
Bombay port 81.41 17.76   0.83 53.61 34.94   12.05
All ports 61.43 18.20 19.74 0.63 14.17 50.12 34.89 0.82

However, the volume of export consignments to Bombay port by rail, road and other modes of transport during 1969-70, formed 85.1, 14.3 and 0.6 per cent of the total, respectively.

Excluding the traffic from within 25 kilometres of Bombay port, which normally has no alternative to road transport, the share of different modes of transport in the total export cargo of all commodities during 1969-70 was as follows:—

By value
By weight
Road
Rail
Inland water ways
Others
Road
Rail
Inland water ways
Others
Bombay port 64.56 53.44     28.39 71.61    
Total of all ports 57.04 31.25 10.94 0.77 7.51 56.69 35.80 Negligible

The share of the three modes of transport in the movement of selected commodities to Bombay port during 1969.70 by value and weight was as follows:—

Commodity
Percentage share of value of exports
Percentage share of weight of exports
Road
Rail
Inland water ways
Road
Rail
Inland waterways
Cotton Textile 91.2 8.8 .. 88.6 11.4 ..
Oil-cakes 41.7 58.3 .. 38.5 61.5 ..
Engineering goods 95.1 4.9 .. 93.5 6.5 ..
Iron and steel products 58.1 41.9 .. 60.4 39.6 ..
Raw cotton 33.2 66.8 .. 44.5 55.5 ..

 

Rail-borne Trade : Bombay now serves as an entrepot trade centre mainly due to the net.work of railway routes emerging from Churchgate on Western: Railway and Victoria Terminus (V.T.) on Central Railway.

The former Great Indian Peninsula Railway was opened for traffic for 1,258 miles (2025km.) in 1870. The Bombay, Baroda and Central India, Railway company incorporated in July 1855 entered into contract with the East India Corrlpany for the eonstruction of railway line and the railway was opened for trafficfor 312 miles (502 km.) in 1870.

The Great Indian Peninsula (G.I.P) railway gradually started to serve southern, eastern and north-eastern portions of India and the Bombay, Baroda and Central India railway to serve Gujarat, Rajputana, Central India, United Provinces and the Punjab.

Statistics of goods carried during the first few years after the opening of these two railways are not available. In 1880, the traffic on both these railway lines increased in consequence of the new rail-routes.

The following statement reveals the statistics of imports and exports excluding the railway company's materials from and to stations on the two railway lines in Bombay Island for a few years from 1886 :—

(Figures in tonnes)

Year

Great Indian Peninsula Railway

Bombay, Baroda and Central India Railway

 

Imports

Exports

Imports

Exports

1886

11,55,152

3,32,671

4,55,407

1,66,298

1890

9,38,445

3,16,829

2,71,871

1,86,015

1900

7,16,610

5,60,447

1,87,561

6,97,551

1907

16,27,503

5,86,754

7,31,147

3,58,745


The value of the rail.borne trade of Bombay Island according to the returns published by Government was as given below:—

(Figures in '000 Rs.)

Year

Imports

Exports

External

Internal

External

Internal

1888-89

1,81,668

1,07,171

61,386

65,639

1890-91

1,40,488

1,15,716

84,352

77,752

1900-01

1,84,529

95,170

1,34,068

1,35,038

1907-08

2,59,587

1,76,055

2,12,962

1,38,909

Of the total rail.borne trade of Bombay carried during 1907-08 nearly 40 per cent represented trade with other parts of the Bombay Presidency, 17 per cent with the Central Provinces and Berar, 11 per cent with the United Piovinces, about 5 to 8 per cent with Punjab; 4 per cent with Madras and one per cent with Bengal.

The article-wise imports and exports carried by the railway to and from Bombay city during 1888-89 and 1907-08(The Gazetteer of Bombay City and Island, Vol. I. 1909, p. 449,) are shown in Table No. 16.

TABLE No. 16
Chiff Articles of Imports and Exports Carried by Railway to
and from Bombay City
(Quantity in Mds.(1 Maund = Q.037 Tonnes,) and Value in '000 Rs.)

 

1888-89

1907-08

Articles

Quantity

Value

Quantity

Value

 

 

 

 

 

Imports—

38,442

2,88,839

56,602

4,35,642

1. Coal and coke

160

140

725

438

2. Cotton raw ..

6,374

1,17,649

10,785

2,21,029

3. Cotton Mfrs. European

6

259

9

510

4. Cotton Mfrs. Indian

330

11,300

321

12,984

5. Dyes and tans

497

2,291

1,413

4,200

6. Wheat

15,364

39,667

2,360

8,656

7. Other food grains 2,751 6,759 4,446 15,098
8.Gunny bags and cloth 23 238 226 3,022
9.Hides and skins 17 609 181 5,126
10.Liquors 6 112 2 83
11. Metals 114 1,173 10,035 9,536
12.Oils 91 1,632 108 1,777
13. Oil-seeds 9,100 39,065 11,707 63,823
14. Opium 59 46,586 33 20,719
15. Provisions 824 6,466 860 11,845
16. Railway plant and rolling stock     84 441
17.Spices 121 2,438 376 5,289
18. Sugar 69 391 130 900
19. Wool,raw 121 3,986 130 4,277
20. Others 2,415 8,078 12,671 44,989
21. Gold coins (Seperate figures of bullion and treasure trade are avalibale from 1896-97)       35,962
22. Silver coins and bullion       13,073
         
Exports- 14,958 1,27,025 31,327 3,51,871
1. Caol and coke 5,639 4,934 6,371 4,601
2.Cotton, raw 74 1,448 357 4,069
3.Cotton Mfrs. European 1,080 47,589 1,790 1,21,223
4. Cotton Mfrs. Indian 1,355 9,468 224 9,445
5.Dyes and tans 87 1,918 264 6,159
6.Wheat 36 128 58 276
7.Other foodgrains 651 3,033 3,321 18,381
8.Gunny bags and cloth 445 4,864 497 7,417
9.Hides and skins 4 180 47 1,313
10. Liquors 93 3,323 214 7,605
11. Metals 1,961 12,791 4,042 47,358
12.Oils 495 3,016 2,476 14,240
13.Oil-seeds 35 191 163 1,112
14. Opium 1 1,057 2 1,773
15.Provisions 1,026 4,647 1,254 19,147
16.Railway plant and rolling stock     1,663 7,270
17. Spices 296 4,943 496 8,883
18.Sugar 987 7,707 2,847 19,560
19.Wool, raw 1 33 1 35
20. Others 692 15,755 5,240 55,002
21.Gold coins (Seperate figures of bullion and treasure trade are avalibale from 1896-97)       7,528
22. SIlver coins and bullion       1,32,323

During 1975-76, 12,51,053 tonnes of goods were imported in Greater Bombay at different stations on the Western Railway, whereas 9,14,559 tonnes of goods were exported from the same stations, the details of which are shown in the following statements.

(1) Western Railway : The following statement shows the statistics of imports and exports by Western Railway ( Public Realtions Officer, Railways, Bombay) during 1974-75 :—

Imports
Exports
Station / Goods Depot
No of wagons
Weight in tonnes
No of wagons
Weight in tonnes
1
2
3
4
5

Dadar

4,953

96,955

732

12,212

Mahim junction  

1,598

23,478

871

7,406

Bandra

10,887

39,791

3,606

33,739

Andheri

6,536

1,26,864

690

11,195

Jogeshwari

45,147

2,42,699

8,516

93,707

Goregaon

2,078

11,805

540

5,908

Kandivli

3,303

74,927

840

15,932

Borivli

2,272

85,598

388

1,808

Carnac Bunder

37,251

5,08,956

44,567

7,32,652

Total

1,14,025

12,11,073

60,750

9,14,559


(ii) Central Railway : The following statement shows the turnover of goods traffic from different depots in Bombay on Central Railway (Divisional Superintendent, Central Railway, Bombay.) during 1975-76 and 1976-77 :—

(Figures in tonnes)

Goods Depot
Loading
Unloading

1975-76

1976-77

1975-76

1976-77

1

2

3

4

5

Wadi Bunder

11,94,227

14,15,703

16,20,282

16,71,056

Sion

46,920

71,392

1,82,400

3,69,340

Kurla

4,828

3,685

2,647

9,008

Trombay

17,89,272

21,62,029

6,11,891

1,59,602

Vidyavihar

25,348

22,835

3,67,366

3,53,592

Ghatkopar

5,555

3,952

70,260

1,00,720

Vikhroli

13,863

14,628

81,320

1,25,703

Bhandup

37,601

39,036

94,185

83,016

Total 31,17,614 37,33,260 30,30,351 28,72,037

During 1975-76, 31,16,614 tonnes of goods were exported by Central Railway from different goods depots within Greater Bombay revenue limits. The same increased to 37,33,260 tonnes during 1976-77. The imports by Central Railway arriving in different goods depots within Greater Bombay area amounted to 30,30,351tonnes during 1975-76 and the same increased to 42,82,037 tonnes during 1976-77.

The railways operate different schemes for the movement of goods such as quick transit service, container service and ordinary goods movement. In addition some of the export consignments are moved by passenger trains.

The quick transit service is operated between selected pairs of stations, and the delivery of goods booked under this scheme is guaranteed, the stipulated delivery period being observed in 95 per cent of the cases. The container service has been introduced to provide door to door service, thereby offering facilities comparable to those offered by road transport.

The commodity-wise tonnage of export movement from origin connected by quick transit service (Q.T.S.) with Bombay Port in 1969-70 is shown in Table No. 17.

TABLE No. 17
Tonnage of Export Movement from Origins connected by Quick Transit Service with Bombay Port in 1969.70
(Survey of the Domestic Transport of India's Export Cargo, Vol II, May 1971; by Operations Research Group, Baroda.)

Tonnage of export traffic
Origin
Commodites
Total of all modes of transport
Moved by rail including quick transit service
Moved by quick transit serice
1
2
3
4
5

Hyderabad

Oil.seeds, textile  yarn, cotton textiles, fruit preserved.

20,774

 

 

Ahmedabad

Iron and steel, oil.cakes, cotton textiles, textile fibres, engineering goods.

29,207

22,309

1,893

Faridabad

Crude vegetable material, engineering goods.

3,436

30

 

Cochin

Tea

988

988

 

Bhopal

Artware

3

 

 

Mysore

Cotton textiles, wood manufactures, textile fabrics excluding cotton and jute, artware.

1,945

107

 

Bangalore Fruits- preserved, cotton textiles, engineering goods, artware 1,597 2 ..
Amritsar OIl-cakes, tea, spices 26,344 26,178 2,648
Jullundur Engineering goods 1,858 191 191
Ludhiana Engineering goods 1,536 980 980
Coimbtore textile yarn 434 .. ..
Madras Cotton textiles, readymade garments 5,698 55 ..
Madurai Cotton textiles 9 .. ..
Kanpur Crude animal material, cotton textiles, oil-cake 21,368 19,818 12
Saharanpur Artware 763 236 236
Moradabad Artware 2,636 2,043 1,481
Calcutta Tea, cotton textiles, engineering goods, building material, floor covering 7,914 5,712 2,531
Delhi Iron and steel, engineering goods, cotton textiles, fruits and nuts, hides, readymade garments, toys, spices, yarn, artware 14,148 7,025 1,469
  Total 1,40,658 85,674 11,441

The commodity wise composition of rail movement of export goods through Bombay Port during 1969-70 (Ibid) is shown below:—

Commodities
Tonnage
Percentage to total through Bombay port
Average lead (km.)

1.

Oil.cake

1,99,659

45.6

785

2.

Iron and steel

80,745

18.4

1,064

3.

Sugar

45,000

10.3

N.A.

4.

Crude minerals

39,069

8.9

896

5.

Crude animal material

22,678

5.2

1,151

6.

Textile fibres and waste

18,539

4.2

1,655

7.

Others

32,230

7.4

1,188

 

Total

4,37,920

100.00

948

Table No. 18 reveals the quantity and value of principal commodities arriving in Bombay from various places on different rail-routes, for export.( Survey of the Domestic Transport of India's Export Cargo,  May 1971, Vol. II, Operations Research Group, Baroda)

TABLE No. 18
Quantity and Value of Principal Commodities arriving in Bombay by different Rail Routes for Export, 1969-70

Route/Origin

Distance from Port (km)

Principal commodities

Tonnage

Value (Rs.in lakhs)

(1) 

(2)

(3)  

(4)

(5)

1. Amritsar-Jullundur-Delhi-Baroda-Bombay—

 

 

Amritsar

1,834

Oil-cake

26,178

200.17

Dewas

790

Oil-cake

26,062

176.10

Ganaur

1,455

Iron and steel products

24,700

244.59

Abohar

1,652

Textile fibres and waste

8,361

297.70

Delhi

1,388

Cotton textiles, iron and steel products, engineering goods.

6,336

297.70
*(97.94)

Ratlam

653

Crude animal materials

5,603

64.92

Indore

707

Iron and steel products

5,005

37.43

Jagadhri

1,534

Paper

3,541

43.06

Rajapura

1,612

Crude animal materials

2,773

31.18

Gaziabad

1,408

Iron and steel products

2,209

21.87

Chandigarh

1,632

Textile fibres and waste

1,226

45.56

Ludhiana

1,698

Engineering goods

980

48.33

Giddarbha

1,607

Textile fibres and waste

962

41 03

Jullundur

1,755

Toys, engineering goods

190

45.38

Moradabad

1,477

Artware

 

*(291.56)

Saharanpur

1,569

Artware

 

*(33.60)

2. Bhatinda-Ganganagar-Kankroli.Jaipur-Ahmedabad.Bombay

Bhilwara

869

Crude minerals

30,069

30.03

Ahmedabad

492

Oil cake, cotton textiles, iron and steel products

22,308

412.10

Sangaria

1,482

Textile fibres and waste

5,003

192.16

Baroda

392

Iron and steel products

2,603

21.58

Bhatinda

1,579

Textile fibres and waste

2,504

345.62

Jaipur

1,117

Perfumery

2,114

40.78

Wankaner

696

Building materials, cotton textiles

1,220

13.16

Kankroli

942

Mica waste

1,140

0.48

Ganganagar

1,523

Textile fibres and waste

658

38.22

Deesa

653

Crude animal materials

453

6.20

Gosunda

852

Crude animal materials

340

4.65

3. Kanpur-Allahabad-Satna-Itarasi-Bhusawal-Bombay-
Kanpur 1,348 Crude animal materials,oil-cake 19,784 198.51
*(4.75)
Satna 1,180 Engineering goods 956 46.46
Gwalior 1,255 Cereals 908 7.96
Fatehgarh 1,624 Cotton textiles 498 7.27
4.Howrah-Nagpur-Bhusawal- Bombay-
Akola 584 Oil-cake 51,227 374.26
Dhule 383
Oil-cake
38,407 128.02
Amravati 673 Oil-cake 15,616 84.53
Badnera 663 Oil-cake 12,932 94.18
Pulgaon 729 Cotton-Textiles 372 27.56
Tumsar 917 Ferro-manganese 10,000 73.00
Bhilai 1,102 Iron and steel products 10,000 1,964
Calcutta 1,964 Tea 5,711 297.48
Kanhan 856 Iron and steel products 5,000 49.50
Jamshedpur 1,718 Iron and steel products 3,235 26.43
Kamptee 852 Crude animal materials 2,037 27.90
Ballarshah 892 Paper 1,721 23.06
5.Madras-Guntakal-Bangalore-Pune-Bombay
Devangere 871 OIl-cake 13,400 71.42
Raichur 691 OIl-cake 5,276 44.85
Amarnath 60 Chemicals 2,206 9.00
Cochin 1,830 Tea 988 103.56
Dandeli 704 Paper 784 8.11
6.Others- .. Sugar 45,328 561.51
        *(2.15)

*Figures in parenthesis give only value of artware export.

(iii) Bombay Port Trust Railway : When the traffic between the port and the hinterland developed, the two main railways G.I.P. and the B.B. & C.I. laid out capacious goods yards in close proximity to and connected with the Prince's and Victoria Docks by three sidings crossing the Frere Road. As these sidings were capable of accommodating only a fraction of the traffic, the bulk of traffic had to be conveyed from ship to rail and vice versa by the cumbersome and expensive method of trans­portation by bullock carts which involved double handling and storage. The arrangements for connecting the goods yards of the main railways with dock sidings were extremely defective. Therefore a scheme for the construction of port railway was mooted in 1894. The Bombay Port Trust railway is connected to the broad.gauge main lines of the Central and Western Railways at its interchange railway yard at Wadala. The railway runs foi about 11 kilometres of straight route between Ballard Pier and Wadala. The Bombay Port Trust railway serves the docks as well as the important installations and factories on the port trust estates. It handles over 4 million tonnes of traffic annually which represents about 60 per cent of total rail.borne goods traffic of Bombay city.

Table No. 19 gives the statistics (THe directorate General of Commercial INtelligence and Statistics, Minnistry of Commerce, Govt. of India, Calcutta.) of inward and outward movement (by rails) of important commodities into and from Bombay Port during 1970-71 and 1975-76.

TABLE No. 19
Inward and Outward Movement (by Rails) of Important Commodities into and from Bombay Port during 1970-71 and 1975-76

(Figures in Quintals)

1970-71
1975-76
Commodities
Inward
Outward
Inward
Outward
1
2
3
4
5

1. Animals (In numbers)—

 

 

 

 

 (a) Cattle excluding sheep and goats

560

54

1,748

30

 (b) Horses, ponies etc.  

19

 

10

....

 (c) Sheep and goats

328

 

99

20

 (d) Other animals

 

 

13,447

852

2. Bones

2,29,902

266

1,84,925

566

3. Bricks

1,13,929

2,387

1,16,157

1,313

4. Cement

23,19,552

3,716

44,38,114

16,067

5. Coal and coke

27,59,738

26,241

23,13,648

3,425

6. Coffee

3,295

1,094

3,377

124

7. Cotton twist and yarn—

 

 

 

 

 (a) Indian  

68,670

46,045

12,955

32,902

 (b) Foreign

1,826

2,635

1,071

1,028

8. Cotton piecegoods—

 

 

 

 

 (a) Indian

62,363

5,83,887

69,489

3,64,473

 (b) Foreign

273

1,078

433

6,915

9. Myrobalans

345

1,853

2,564

1,228

10. Fruits.dried

27,468

32,736

33,979

22,079

11. Glass

98,437

61,657

90,020

12,504

TABLE NO. 19 CONTD

Commodities

1970-71

1975-76

Inward

Outward

Inward

Outward

(1)

(2)

(3)

(4)

(5)

12. Grain, Pulses and Flour-

(a) Gram and gram products

9,80,922

35,024

7,24,810

24,693

(b) Pulses other than gram

13,09,936

76,635

9,64,894

64,449

(c) Maize

1,05,553

2,10,849

95,160

76,833

(d) Jowar

36,465

4,936

9,38,227

4,11,394

(e) Bajra   

6,62,790

456

3,36,982

2,837

(/) Millets

20,884

8,143

2,829

24,90,470

(g) Rice in the husk

1,19,054

3,874

3,554

4,908

(h) Rice not in the husk

21,88,146

97,477

11,85,584

45,967

(i) Wheat

10,05,773

24,69,878

5,21,342

81,78,981

(/) Wheat flour

2,676

1,16,228

2,021

1,34,381

(k) Other sorts

4,47,628

39,401

6,06,682

2,09,333

13. Hemp (Indian)

3,003

1,700

255

185

14. Hides, raw

4,406

2,505

9,842

462

15. Skins, raw..   ..

7,957

1,068

4,028

37

16. Hides  and skins,tanned and leather.

23,585

10,310

10,720

9,814

17. Jute—raw (loose)

677

380

1,027

8

18. Jute—raw (pucca bales)

1,942

591

1,063

302

19. Gunny bags and cloth

3,47,556

28,385

4,20,323

22,865

20.   Iron and steel bars, sheets etc.

54,13,742

17,42,566

3,46,076

19,49,832

21.   Lac of shellac

994

329

2,632

48

22. Lime and lime.stone

2,46,241

1,498

1,47,811

1,272

23. Manganese ore

2,78,650

11

741

2

24. Oil.cakes—

 

 

 

 

(a) Castor

13,327

1,02,405

17,460

1,02,816

(b) Others

22,54,454

1,67,372

38,05,743

84,395

25. Kerosene oil   ..

58,120

9,11,698

1,04,802

4,75,302

26. Vegetable oils.

 

 

 

 

(a) Castor  

79,641

1,994

2,82,707

786

(b) Coconut

3,023

41,008

5,180

20,257

(c) Groundnut

85,292

7,821

68,401

22,254

(a) Others

1,26,875

7,29,200

3,17,329

80,670

27. Oil.seeds—

 

 

 

 

(a) Castor   ..

1,43,122

859

1,47,520

2

(b) Cotton

3,79,208

5,444

2,41,139

821

(c) Groundnut 

3,49,718

11

1,83,565

2,418

(d) Linseed    ..

53,861

672

1,84,726

22

(e) Rape and mustard

10,902

978

12,777

138

(f) Til or jinjili

15,793

695

1,25,996

1,390

28. Ghee    ..

144

1,950

18

4,026

29.Rubber-raw 24,947 5,980 772 1,357
30.Salt 51,419 56,731 2,82,187 92,424
31.Sugar 24,33,993 3,084 30,18,674 2,015
32.Khandsari 2,28,636 254 17,402 175
33.Gur,Jaggery 3,41,592 1,744 3,48,079 790
34.Molasses 19,264 43 3,89,419 202
35.Tea 1,89,458 603 1,27,193 1,186
36.Tiles 16,113 24,042 25,522 12,902
37,Tobacco 36,000 1,158 14,654 3,750
38.Teakwood 77,118 9,664 1,00,005 519
39.Other timber 15,33,288 1,05,630 15,33,096 1,25,552
40.Wool-raw 9,857 67,974 6,624 27,957
41.Raw cotton lint-        
(a) Indian 4,90,266 47,495 8,22,375 30,208
(b)Foreign 3,866 15,063 6,839 562
42.Kapas 25,920 22,457 20,960 57,072

The total volume of through traffic from and to the trunk railways registered a fall of about 2.38 lakh tonnes during 1980-81, as compared to the volume of 3.35 lakh tonnes during 1970-71. The decrease was mainly due to the fall in traffic in commodities, such as, asbestos, fibres, chemicals, fertilisers, iron and steel, salt, sulphur, molasses, oil-cakes, cement, charcoal, raw cotton etc.

The following figures reveal the statistics of total volume of commodities unloaded i.e. booked from the trunk railways to B,P.T. railways and loaded by B.P.T. railway for trunk railway stations during 1970-71 and 1980-81. (Administration Reports, 1971-72 and 1980-81, Bombay Port Trust.)

 

Volume of commodities handled

Year

Loaded
(hundred tonnes)

Unloaded (hundred tonnes)

(1)

(2)

(3)

1970-71

15,994

17,551

1980-81

17,253

11,697

Air-borne Trade (Domestic) : Air transport is the fastest means of carrying passengers and goods and speed is the key-note of all industrial, economic and other activities in modern age.

The year 1953 recorded the nationalisation of air transport in India and as a result witnessed the birth of two national air carriers, one for domestic services and another for the 'International"services which were intended to discharge their national obligations, These corporations were Air India International and Indian Airlines. The services operated prior to nationalisation, by the private airlines, were profit oriented. The Indian Airlines Corporation operates on all important routes with national interest and the overall development of air transport in view.

Principal commodities moved by domestic air transport consist of costly commodities such as art silk goods, woollen and silk carpets, fur goods, readymade garments, jewellery, fresh fruits, perfumery, essential oils, chemicals and drugs, etc.

During 1969-70 the quantity of 4811(Survey of the Domestic Transport of India's Export Cargo, Vol. I, May 1971, Operations Research Group, Baroda)  tonnes worth Rs.30 crores was arrived at Santa Cruz Airport through domestic air-routes for export. The domestic airport at Bombay during 1969-70 accounted for 56.6 per cent in quantity and 54.09 per cent of value of the total imports followed by Calcutta, Madras and Delhi airports.

The following statement shows the route-wise quantity of goods carried by Indian Airlines from Bombay to various destinations and the revenue earned on the same during 1975-76 :—


Route

Weight in
kg.

Revenue in
Rs.

Bombay-Delhi

16,40,509

79,76,497

Bombay-Calcutta

10,05,962

66,92,149

Bombay-Bangalore

6,20,569

22,96,205

Bombay-Porbundar

5,839

11,678

Bombay-Madras

6,71,689

30,89,769

Bombay-Rajkot

84,405

1,30,985

Bombay-Goa            

4,01,459

7,62,771

Bombay-Hyderabad   

3,20,708

9,76,951

Bombay-Cochin

87,070

4,41,668

Bombay-Bhavnagar

41,607

60,330

Bombay-Ahmedabad

            61,242

1,19,423

Bombay-Jamnagar 

85,901

1,80,373

Bombay-Pune

1,14,479

85,859

Bombay-Baroda

48,386

77,422

Bombay-Aurangabad

9,779

13,691

Bombay-Belgaum

27,474

49,627

Bombay-Mangalore

32,228

1,02,076

 

52,59,306

2,30,67,474

Coastal Trade : Bombay assumed importance as a port of import-export trade since the middle of the 18th century. But the real impetus to the growth of trade was offered by the Cotton Boom of 1861-65 and the opening of the Suez Canal in 1869. The coastal trade was mainly carried through country crafts. (For the history of Coastal trade see Gazetteer of Bombay City and Island, Vol. 1, 1909, pp.438-45)

In the beginning of the nineteenth, century, the value of total coastal trade from Bombay amounted to Rs. 2,30 lakhs, of which the value of imports amounted to Rs. 1,28 lakhs and of exports to Rs. 1,02 lakhs. The ports of Gujarat and Cutch accounted for the largest proportion of exports and also of imports.

The principal articles of trade were raw cotton which was collected from Gujarat and Cutch for export to China; cotton piece-goods brought from Gujarat, Cutch, Bengal and Goa for export to Persian Gulf and Arabia; rice from Goa, Gujarat and Cutch; and Bengal sugar brought to Bombay for export to Persian Gulf and to various districts in the then Bombay Presidency.

The coastal trade maintained steady progress in the early thirty years of the nineteenth century, except a temporary depression in 1811-12 because of unfavourable conditions in the China market and great scarcity in Cutch and Gujarat. Again in 1827, the commercial position in Bombay was far from favourable as Calcutta monopolized much of trade and commenced to import arid export the commodities directly. In spite of this, as a result of the abolition of company's monopoly in 1813, the trade in general received a considerable impetus arid the coastal trade of Bombay was valued at Rs. 5,26 lakhs in 1830-31. Between 1835 and 1850, the then Bombay Government made many efforts to enlarge both the coastal and the foreign trade by removing restrictions such as inland sugar duties in 1836 and cotton duties in 1848. However, the course of trade during this period was not smooth. By the end of 1850, the coastal trade of Bombay had advanced in value to Rs. 11,78 lakhs; of which Rs. 7,57 lakhs represented imports.

As cotton received high prices during the period of American War, Bombay enjoyed an unusual amount of prosperity during 1861-65 and both the foreign and coastal trade increased immensely. The other reason for this prosperity was the commencement of seven cotton mills in Bombay between 1854 and 1860.

Railway communications with the interior were opened up in 1867. Due to the growth of road and railway communications, the value of coastal imports rose from Rs. 3,64 lakhs in 1860-61 to Rs. 49,31 lakhs in 1870-71. From 1880 to 1906, the value of coastal trade fluctuated between Rs. 16 and 25 crores.

The pre-war average of coastal trade (1909-14) was valued at Rs. 32,30 lakhs as against the foreign trade of Rs. 1,13,15 lakhs. During 1980-81, i.e. after about seventy years, the value of coastal trade stood at Rs. 1,38,22 lakhs.

(i)Imports : The value of coastal imports showed a declining trend as the imports decreased considerably from Rs. 38,60,35 thousands in 1918-19 to Rs. 18,54,75 thousands in 1935-36 and again further declined to Rs. 14,40,54 thousands during 1937-38. The value of coastal exports fluctuated from Rs. 31,34,04 thousands in 1918-19 to Rs. 2,28,72 thousands in 1935-36 and then to Rs. 20,46,96 thousands in 1937-38.

In the pre-Independence period the principal commodities of trade originating from Bombay Port comprised foreign cotton-twist and yarn, Indian cotton twist and yarn, foreign as also Indian cotton piece-goods, woollen piece-goods, iron and steel bars, kerosene, salt, jowar and bajri, wheat and flour, sugar, etc., while the main articles received at Bombay Port in the pre-Independence period included coal, raw cotton, cocoanuts, copra, rice, wheat, gunny bags, liquors, spices, etc.

During 1960-61, the quantity of coastal exports and imports at Bombay amounted to Rs. 20,53,300 and 13,62,900 metric deadweight tonnes, respectively. In 1965-66, the coastal exports and imports at Bombay were 30,16,300 and 14,66,400 metric deadweight tonnes, respectively.

The comparative figures of total imports and exports for certain years are given below :

(In metric deadweight tonnes)


Year

Coastal Imports    

Coastal Exports

1965-66

14,66,400

30,16,300

1970-71

13,09,800

15,83,400

1974-75

10,38,900

19,60,800

1975-76

9,73,200

13,45,200

1980-81

11,34,200

18,26,000

The decline in coastal imports and exports may be explained as the result of opening up of new rail routes and roads connecting Bombay with distant and far-off places in India.

The heavy wharfage charges, cumbersome formalities and custom regula­tions might also have adversely affected the coastal service as the same became unattractive to exporters, who prefer to send their goods by rail or road transport. Another reason for the decline in coastal trade, since 1965-66, may be the decline in the coastal exports of petroleum oil, decline in iron and steel imports as a result of the growth of indigenous production, decline in foodgrain imports and the virtual disappearance of the iron ore traffic as a consequence of the development of other ports for pre export. In 1980-81, the coastal imports and exports showed an increase in quantity compared to 1975-76.

Table No. 20 shows the commodity-wise break up of coastal imports into Bombay Port.

The commodity-wise coastal imports in Bombay Port also varied from 1970-71 to 1975-76 and again in 1980-81. The imports of building material decreased from 6,55,600 metric deadweight tonnes in 1970-71 to 3,46,000 metric deadweight tonnes in 1975-76 and to 2,47,200 metric deadweight tonnes during the year 1980-81.

The building material imported in Bombay from different ports in India accounted for 50.05 per cent of total imports in 1970-71; and the same decreased by 35.59 per cent in 1975-76, and further by 21.79 per cent in 1980-81.

The quantity of imports of metals and metal products increased from 11,100 metric tonnes in 1970-71 to 23,600 metric tonnes in 1974-75, while it declined to 7,300 metric tonnes in 1975-76 and further to 600 metric tonnes in 1980-81. The quantity of salt accounted for 13.32 per cent of total imports in 1970-71, 20.71 per cent in 1974-75 and 21.44 per cent in 1975-76. Even though the percentage of salt imported in 1975-76, showed an increasing trend in 1975-76, the actual figures reveal the decline from 2,15,200 metric tonnes in 1974-75 to 2,08,800 metric tonnes in 1975-76. In 1980-81, the import of salt further decreased to 1,01,700 metric tonnes accounting for 8.66 per cent of the total coastal imports in Bombay Port.

TABLE No. 20
Coastal Imports (Domestic) into Bombay Port Trust
(Annual Administration Reports, Bombay Port Trust; 1971-72,1976-77 and 1981-82.)
(Docks and Bunders combined) in Metric Tonnes

(Rounded off to hundred)

Commodities

1970-71

1975-76

1980-81

1.

Building material  

6,55,600

3,46,400

2,47,200

2.

Chemicals

22,500

16,100

15,100

3.

Clay

44,600

6,500

 

4.

Copra

35,100

3,900

 

5.

Coir and coir products

2,100

 

 

6.

Cocoanut

10,100

 

 

7.

Cotton-raw

700

 

 

8.

Dates

400

 

 

9.

Drugs and medicines

1,000

 

 

10.

Fertilizers

100

 

19,300

11.

Earth and earthenware

 

9,900

7,500

12.

Fish—dried and fresh

35,300

45,400

17,100

13.

Foodgrains

300

300

5,000

14.

Foodstuffs N. O. S.

500

1,100

....

15.

Fruits—dried and fresh

1,500

800

....

16.

Machinery N. O. S (Not otherwise specified.)
.

100

400

 

17.

Gunnies and hessians

8,600

....

....

18.

Metals and metal products

11,100

7,300

600

19,

Oilseeds

11,400

12,200

100

20.

Oil and fats N. O. S.

16,300

900

100

21.

Paper and paper products

200

 

 

22.

Salt

1,74,500

2,08,800

1,01,700

23.

Rubber-raw

21,300

5,500

 

24.

Wood and timber 

11,40,600

1,28,800

60,700

25.

Fibres—synthetic

           100

 

 

26.

Miscellaneous

     2,21,300

1,80,700

6,59,800

 

Grand Total   

24,15,300

9,75,000

11,34,200

(ii) Exports: The total coastal exports from Bombay to other centres in India though increased in 1974-75 over those in 1970-71 they declined in 1975-76. However the quantity of exports of different commodities recorded varied changes. The coastal exports of fertilisers were not specifically mentioned in 1970-71 statistics, but the same formed a large amount in 1974-75 (22,600 tonnes).

The exports of commodities, such as, building materials, chemicals, cotton, drugs and medicines, foodgrains, metals and metal products, spices including pepper, oil-seeds, etc., showed declining trend. On the other hand, a very few commodities such as asphalt, bitumen, pitch tar, and creosote, recorded an increase from 8,100 tonnes in 1970-71 to 12,700 tonnes in 1974-75 and again to 24,000 tonnes in 1975-76. The commodities grouped under miscellaneous recorded the highest percentage of total coastal exports, and the percentages to total exports under this group during 1970-71, 1975-76 and 1980-81 were 90.48,94.80 and 98.88, respectively.

Table No. 21 shows the statistics of coastal exports from Bombay Port.

TABLE No. 21
Statistics of Coastal Exports from Bombay Port (Metric Tonnes)

(Figures rounded off to hundred)


Commodities

1970-71

1975-76

1980-81

1.

Asbestos and asbestos material.

100

 

 

2.

Asphalt, bitumen, pitch tar and creosote

8,100

24,000

1,300

3.

Beverage       and    drinks—non-alcoholic

600

 

100

4.

Bicycles and bicycle parts

 

 

 

5.

Building materials ..

8,400

1,800

800

6.

Chemicals

6,300

1,100

100

7.

Cotton

2,700

300

 

8.

Drugs and medicines

800

 

 

9.

Dyes and colours of all kinds .

200

 

 

10.

Fodders

1,700

1,200

900

11.

Earth and earthenware

 

100

 

12.

Foodgrains

 49,800

. 14,900

1,600

13.

Foodstuffs N.O.S.

1,700

200

400

14.

Fruits and vegetables

7,100

2,600

1,500

15.

Gunnies   and  hessians,  jute manufactures and hemp.

4,700

1,400

 

16.

Fertilisers

 

9,100

10,600

17.

Glass and glass products

 

100

 

18.

Instruments etc.

100

100

100

19.

Lac, gums and resins

900

400

100

20.

Leather and leather Mfgs.

 

 

 

21.

Machinery N.O.S.

600

300

 

22.

Manures

18,300

 

 

23.

Metals and metal products

28,600

4,300

800

24.

Oil-seeds

1,700

700

1,900

25.

Oil and fats N.O.S.

600

300

 

26.

Paints and paint materials

300

 

100

27.

Spices including, pepper

1,600

600

 

28.

Sugar

500

400

 

29.

Textiles

400

100

 

30.

Woodpulp

 

4,500

 

31.

Miscellaneous

      14,32,700

12,76,300

18,05,700

Grand Total  

15,78,500

13,44,800

18,26.000

Top

FORWARD TRADING

Futures trading plays a key role in the marketing of many important agricultural commodities and processed products.

Apart from U.S.A. and U.K., India is a large country which has had active futures markets over a long period. As soon as the cotton exchanges were established in U.K. and the U.S.A. (1880), the cotton merchants in Bombay followed suit. Quite a large proportion of the Indian cotton crop found its way to Bombay and the city became the largest cotton market in the East. After the American Civil War, in addition to this spot trade, a good deal of futures business was conducted on a large scale. But the first step in the evolution of an organised futures market was taken with the establishment of Bombay Cotton Traders' Association in 1875, by the buyers who were mostly Europeans. Before the establishment of this association, the trading was erratic and uncontrolled. Soon-afterwards, a rival body known as the Bombay Cotton Exchange which was predominantly Indian, was set up. However, the dissatisfaction on the part of the dealers led to the emergence of a third body in 1915, called the Bombay Cotton Brokers' Association, mainly for regulation of futures business.

In 1918, the Government of India constituted a Cotton Contracts Committee to control the cotton trading in Bombay, A clearing house was established and periodical settlements were effected. In 1919, the Commit­tee was replaced by a Cotton Contracts Board which in turn founded a central cotton association in 1922 under the name of East India Cotton Association.

In oil-seeds, a futures market was established in Bombay in 1900. Subsequently, numerous other futures markets in oil-seeds came into existence in Gujarat, Saurashtra and Punjab. A futures market in bullion was also established in Bombay in 1920.

Prior to World War II, forward trading in this country was carried on in various agricultural commodities such as cotton, grains, oil-seeds, jute, spices, sugar, shellac, etc., and in non-agricultural commodities such as bullion, metals, cotton yarn and cloth, jute goods etc. During the early years of World War II, as a result of shortages, the prices of various commodities rose to high levels. The Government of India, hence issued orders under the Defence of India Act prohibiting forward trading in several commodities such as raw cotton, cotton cloth and yarn, oil-seeds, vegetable oils and oil-cakes, foodgrains, spices, sugar and gur, etc. Some of these orders under the Defence of India Act, in respect of foodgrains, edible oil-seeds and oils, raw cotton and spices were kept in force under the Essential Supplies (Temporary Powers) Act, 1946, and similar orders about cotton-seed and sugar were issued under the latter Act. In the case of raw cotton only, a general exemption was granted, subject to certain conditions, with respect to forward trading conducted under the auspices of the East India Cotton Association, Bombay.

Among the States, Bombay was the only State which had enacted legislation for the regulation of forward trading. The Bombay Forward Contracts Control Act, 1947, was a comprehensive piece of legislation empowering the State Government to regulate forward trading in commodities and securities and many of the provisions of the draft Futures Markets (Regulation) Bill had been taken from that Act. (Report of the Expert Committee on the Futures Markets (Regulation) Bill, 1950, Ministry of Commerce, Govt, of India, 1951.)

The draft bill alongwith the comments received from State Governments, Chambers of Commerce and the Reserve Bank of India was referred to an expert committee appointed by the Government of India in the Ministry of Commerce on 27th July 1950. One of the cardinal principles of this legislation was to cause the minimum inconvenience to legitimate business activities. After passing through various stages and references to Select Committees, the bill was ultimately passed as the Forward Contracts (Regulation) Act, 1952. This led to the establishment of the Forward Markets Commission in September 1953.

Thus, for the first time in India, the problem of regulating commodity exchanges was tackled on a countrywide basis. The Act is based on the view that strict regulation of forward trading is essential as otherwise the forward trading may lead to excessive speculation which may accentuate price fluctuations to the detriment of the interests of producers as well as consumers.

The Forward Contracts (Regulation) Act, is principally designed to exercise control over those forward contracts which have inherently an element of speculation in them and which are generally known as futures or hedge contracts. The actual day-to-day regulation of such contracts is undertaken by recognised associations. However, the Act also provides for the regulation of forward contracts lequiring the actual delivery of goods, known as non-transferable specific delivery contracts, when Government considers that they are or may be misused and their regulation is necessary. The Act authorises Government to notify from time to time the commodities in which forward trading shall be regulated through recognised associations and those m which it shall be prohibited altogether. It also provides that no association shall be concerned with forward trading in any commodity except under the conditions of a certificate of registration granted by the commission. Recognised associations generally function with a degree of autonomy, but the measures imposed by them or regulation of hedge trading require the consent of the commission. The control is very nominal in the case of registered associations. But their fields of activity are considerably restricted by the ban imposed on forward trading in many commodities.

The main distinction is made between spot and ready contracts on the one hand and forward contracts on the other, the basis being the period of time that elapses between the signing of contract and the contemplated delivery of goods. Under spot or ready contracts, the delivery has to be taken immediately or within a specific number of days. When delivery is contemplated after a longer period of time, the contracts are called forward contracts.

As per this Act, "Forward Contract" means a contract for the delivery of goods at a future date and which is not a ready delivery contract. Forward contracts are further classified into two categories : futures contracts which are used for the purpose of hedging or speculation and specific delivery contracts which are used for marketing merchandise. In futures contracts, though delivery may be contemplated, it rarely takes place. In specific delivery contracts, on the other hand, delivery is a more common feature. Forward contract for specific delivery or specific delivery contract means a forward contract which provides for the actual delivery of specific qualities or types of goods during a specified future period at a price fixed thereby or to be fixed in the manner thereby agreed and in which the names of both the buyer and the seller are mentioned.

Specific delivery contracts are further sub-divided into transferable specific delivery contracts and non-transferable specific delivery contracts depending upon whether the contracts can change hands from one party to another. The Act defines the non-transferable specific delivery contract as a specific delivery contract rights or liabilities whereunder or under any delivery order, railway receipt, bill of lading, warehouse receipt or any other document of title relating thereto are not transferable. When the specific delivery contracts are of the transferable variety, they closely resemble futures trading. The only feature which distinguishes them from futures contracts is that if and when delivery has to be made it has to be in terms of a specified quantity instead of in terms of a prescribed unit of trading and a prescribed basis of contract. Ready delivery contract means a contract which provides for delivery and payment of price either immediately or within such period not exceeding eleven days after the date of the contract and under such conditions as the Central Government may from time to time, by notification in the official Gazette, specify in this behalf in respect of any goods.

Forward Markets Commission : The Commission, with headquarters at Bombay was established in September, 1953 by the Ministry of Commerce and Industry to administer the Forward Contracts (Regulation) Act, 1952 which has among its objects, the regulation of forward contracts, the prohibition of goods and matters connected therewith. Besides, the Commission also undertakes economic measures intended to restrain steep rise or fall in prices of regulated commodities in which forward trading is permitted during that period.

The functions of the Commission are wide as they include all matters arising out of the administration of the Act and such other duties and powers as may be assigned or prescribed. Broadly, the functions of the Commission fall into four categories viz., (i) promotional and exploratory : that is the study of forward market in a particular commodity with a view to inquire whether the market should be brought within the regulatory provisions of the Forward Contracts (Regulation) Act; (ii) enquiry into claims of associations for recognition to conduct forward trading; (iii) supervision and inspection of recognised associations; and (iv) collection of factual data and keeping the different forward markets under observation. Thus, the duties of the Commission are both quasi-judicial as well as executive, in character.

If the Central Government is satisfied, after making such inquiry as may be necessary in this behalf and after obtaining such further information, if any, as may be required that the rules and bye-laws of a association are suitable in the interest of the trade and are in the public interest, it grants recognition to the association.

On 31st December 1976, in all 33 associations from different parts of the country were recognised under the Forward Contracts (Regulation) Act, 1952, of which 5 were in Bombay. The names of these recognised associations, and the commodities in which the forward trading was regulated by them are given below :—


Name of Association

Commodity

(1)

East India Cotton Association Ltd.

Cotton.

(2)

Bombay Oil-seeds and Oils Exchange Ltd...

Castor-seed, ground-nut,  groundnut
oil, cotton-seed, linseed.

(3)

Pepper and Ginger Merchants' Association

Pepper.

(4)

Grain, Rice and Oil-seeds Merchants' Association.

Groundnut kernel.

(5)

Vanaspati   Manufacturers'   Association of
India, Bombay.

Groundnut oil.

As a rule, only one association is recognised for regulating forward trading in any commodity in a particular area.
Futures trading is considered as a device for protection against the price fluctuations which normally arise in the course of marketing of commodities. Stockists, processors and manufacturers utilise the futures contract to transfer the price risk faced by them, and this use of the futures market is commonly known as hedging. Whenever a futures market is organised two markets operate side by side viz., the spot and futures.

However, widely divergent views are heard from the academic circle and the world of business whenever the effects of such speculation and consequently of futures trading on commodity price levels and price variations are discussed. While a few are convinced that commodity futures trading tends to stabilise prices and reduce price variations, others not only disagree with this view, but on the contrary vigorously allege that more often than not, futures trading aggravates the price fluctuations and increases both the magnitude and the frequency of price variations.

Four types of effects on price can be had by futures trading viz., average prices received by producers and paid by consumers, seasonal price variations, inter and intra-seasonal fluctuations in prices and short-term oscillations in prices. The effect of futures trading on prices can be observed from the following statistics pertaining to average yearly prices of groundnut and linseed at Bombay expressed in constant rupees for the years with little or no futures trading and for the years with futures trading.


Year

Average yearly price

A-Years with little or no futures trading

1951-52

63.38

1952-53

80.42

1953-54

61.33

1954-55

46.67

1955-56

61.90

1960-61

76.54

1963-64

74.57

1964-65

77.80

1965-66

104.15

B-Years with futures trading

1956-57

61.48

1957-58

62.30

1958-59

64.07

1959-60

70.22

1961-62

72.37

1962-63

66.99

The analysis of seasonal price indices(A. S. Naik, Effects of Futures Trading on Prices.) showed that both in groundnut and hessian, the amplitude of seasonal price fluctuations as well as the co-efficient variation of seasonal indices were smaller for years with futures trading than for years with little or no futures trading. In linseed, however, the statistical results disclosed that the seasonal fluctuations tended to increase in the presence of futures trading than in its absence.

The activities of the five associations recognised under the Forward Contracts (Regulation) Act, 1952 are described below.

Grain, Rice and Oil-seeds Merchants Association : The Grain Merchants' Association which is now known as the Grain, Rice and Oil-seeds Merchants' Association was established in 1899. Before the establishment of this association in the latter half of the nineteenth century, there was no commercial body worth its name to control grain, and oil-seeds trade in the city of Bombay. In the beginning, the ready trade ingrain and all kinds of oil-seeds was regulated by the association. However, with the passage of time, the necessity to sell forward position was felt and in the year 1911, with the co-operation of buyers who were mostly Europeans, the forward delivery contracts of almost all kinds of oil-seeds like groundnut seeds, linseeds, castorseeds etc., and foodgrains like wheat, jowar, lentils, gram, etc. were formulated. The contracts were at seller's option and the sellers were allowed to give delivery of the goods on any day from the date of the contract. The future delivery date was stipulated to enable the sellers to fetch goods from upcountry centres. But these specific forward delivery contracts had to be suspended when the Bombay Forward Contracts Control Act, 1947 was applied to the trade of oil-seeds in the city of Bombay on the 19th December 1950. Till that time, this was the only association in the city of Bombay, under whose auspices, the forward delivery contracts in oil-seeds were traded.

In the year 1931 the hedge contracts for cotton seeds and groundnut seeds were introduced in Bombay market. These hedge contracts were suspended in the year 1943, when futures trading was banned by the Government of India.

In 1955, the Forward Contracts (Regulation) Act, 1952 was applied to oil-seeds trade in Bombay and the association started regulating non-transferable specific delivery contracts in groundnut seeds, linseed, castor-seed, etc. In 1960, the association was granted registration by the Forward Markets Commission for regulating contracts in principal varieties, such as, oil-seeds and oil-cakes in the year 1965. Even though, the association has been recognised by the Government of India to regulate futures trading in groundnut kernels, at present futures as well as forward specific delivery business in groundnut are banned by the Govern­ment since last few years. The association has its constitution like that of a limited company, and has also formulated trading bye-laws.

The number of members of the association during 1979-80 stood at 578 who were generally the wholesalers. The trading in oil-seeds and grains is mostly concentrated in Bhat Bazar area at Mandvi and Dana Bunder. The merchants who actually deliver or receive delivery of at least 8,000 bags per year and pay subscription on them at a fixed rate are enrolled as ordinary members of the association. Of course, those businessmen who cannot reach this limit are allowed to be enrolled as associate members. Besides, the association enrolls brokers and mukadams under the rules and regulations of the association.

The association has an arbitration board which arbitrates in trade disputes submitted by its members.

The weekly groundnut seed rates in Bombay on certain dates are show in the following statement:—

(Price in Rupees per 50 kg.)


Date

Variety

Khandesh

Khandesh Quality

Madras

Kanpur Bold

4th October 1976

 

172.00

171.00

168.00

11th October 1976

180.00

179.00

 

 

18th October 1976

156.00

155.00

 

 

25th October 1976

156.00

155.00

 

 

1st November 1976

162.00

161.00

 

 

8th November 1976

163.00

162.00

 

 

15th November 1976

169.00

168.00

 

 

22nd November 1976

180.00

179.00

 

 

29th November 1976

176.00

175.00

 

 

31st December 1976

180.00

....

 

 

22nd October 1979

207.00

205.00

 

 

12th November 1979

208.00

207,00

 

 

19th November 1979

208.00

207.00

 

 

26th November 1979

215.00

214.00

 

 

3rd December 1979

218.00

218.00

 

 

10th December 1979

223.00

222.00

 

 

17th December 1979

217.00

216.00

 

 

24th December 1979

213.00

 

217.50

 

31st December 1979

215.00

 

212.50

 

The following statement shows the highest and lowest ready prices of groundnut kernels in Bombay during 1976-77 and 1979-80;—


Year , (November to October)

Highest/ Lowest

Date

Groundnut kernels (Karad-Bold) (Rs. per 100 kg.)

1976-77

Highest

28th December 1976

358.00

 

Lowest

16th December 1976

316.00

1979-80

Highest

14th July 1980

512.00

 

Lowest

12th January 1980

390.00

Pepper and Ginger Merchants' Association: The association was established in 1937, and in 1963 it received the sanction from the Forward Markets Commission for forward trading in pepper.

The membership of the association comprises dealers, exporters and associate members. At the end of the year 1976 (i.e. upto 22nd October 1976); there were on the roll of the association, 38 dealers, 14 exporters and 22 associate members. The total number of brokers registered with the association upto the end of the; year 1976 was 61; The number of member traders dealing in forward trading changes with existing conditions and future prospects of the trade. About fifty percent of the member traders deal in forward trading in pepper. 

The Government of India has authorised the association: to issue certificates of origin in respect of shipments of spices and seeds for export. During the year 1975-76, the association issued 20 certificates to the exporters.

The following Table No. 22 gives details regarding futures trading in pepper undertaken by the association in a few years.

TABLE No. 22
Futures Trading in Pepper undertaken by the Pepper and Ginger Merchants' Association


Month ending

Delivery

Total volume of transactions (in '000 tonnes)

No. of operations holding open position

Total
open
position
(in '000
tonnes)

Proportion of open position  held  by the group above 50 tonnes

Above below
50 tonnes

Long   50     tonnes

Above    below 50 tonnes

Short 50 tonnes

Long

Short

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

(9)

(10)

January 1972

January 1972

0.7

22

 

 

 

Nil

 

 

 

 

March 1972

0.8

 

1

23

1

0.3

33.3

11.1

February 1972

March 1972

0.7

31

1

23

1

0.3

27.5

13.3

 

May 1972

0.2

7

1

12

 

0.1

50.0

 

March 1972

March 1972

0.8

 

 

 

 

Nil

 

 

 

May 1972

0.7

32

1

27

 

0.3

19.0

 

October 1976

November 1976

1.3

28

 

30

 

0.2

 

 

 

 

January 1977

0.4

13

 

18

1

0.2

 

40.6

November 1976

November 1976

0.6

 

 

 

 

Nil

 

 

 

 

January 1977

1.4

24

3

43

1

0.4

41.0

16.8

December 1976

January 1977

1.4

26

 

36

1

0.3

 

17.1

 

March 1977

0.3

9

 

7

 

0.1

 

 

 

The turnover of trade of the association was as follows:-—


Delivery Contract

Period

Volume of
transactions (sales in quintals)

November 1975

26-10-75 to 29-11-75

8,625

January 1976

16-10-75 to 31-1-76

19,575

March 1976

1-12-75 to 30-3-76

17,575

May 1976

2-2-76 to 31-5-76

20,400

July 1976

1-4-76 to 31-7-76

20,325

September 1976

1-6-76 to 30-9-76

18,200

November 1976

2-8-76 to 16-10-76

21,950

January 1977

1-10-76 to 16-10-76

850

The price of pepper in delivery contract was Rs. 1,330 on 5th November 1975, which increased to Rs. 1,410 per quintal on 27th November 1975 due to demand from Communist countries and short supplies because of damage to the crop by excessive and unseasonal rains. The rate for January 1976 delivery contract was Rs. 1,260 per quintal, which declined to Rs. 1,230 on 5th December 1975 due to arrival of new crop of pepper in the terminal markets, and increased to Rs. 1,325 per quintal on 15th December 1975 and closed at Rs. 1,270 per quintal on 31st January 1976.

March 1976 delivery contract, after opening at Rs. 1,275 per quintal on 20th December 1975, declined to Rs. 1,220 per quintal on 25th February 1976 and advanced to Rs. 1,475 per quintal on 29th March 1976, and closed at Rs. 1,447 per quintal on 30th March 1976.

May 1976 delivery contract opened at Rs. 1,285 per quintal on 3rd February 1976, declined to Rs. 1,225 per quintal on 27th February 1976 and advanced to Rs. 1,535 per quintal on 2nd April 1976 due to demand from Communist countries, and closed at Rs. 1,514 per quintal on 31st May 1976.

July 1976 delivery contract, after opening at Rs. 1,485 per quintal on 6th May 1976, rose to Rs. 1780 per quintal on 15th July 1976 due to reported fall in pepper production, and closed at Rs. 1,710 per quintal on 31st July  1976.

September 1976 delivery contract opened at Rs. 1,730 per quintal on 30th June 1976 and advanced to Rs. 1,850 per quintal on 15th July 1976, and declined to Rs. 1,635 per quintal on 4th September 1976 and closed at Rs. 1,656 per quintal on 30th September 1976.

The commencement of trading in the November 1976 delivery was permitted with effect from 2nd August 1976. However the first transaction took place on 25th August 1976, at Rs. 1,697 per quintal and the rate declined to Rs. 1,585 per quintal on 9th September 1976. The delay inthe arrival of new crop of pepper pushed up the price. The rate at the close of the year was Rs. 1,820 per quintal.

January 1977 delivery contract after opening at Rs. 1,590 per quintal on 1st October 1976 declined to Rs. 1,553 per quintal on 6th October 1976, and the rate at the close of the year was Rs. 1,800.

The delivery order rates and quantity tendered for delivery against the transferable specific delivery contracts during 1975-76 are given below (Source.—The   Pepper   and   Ginger   Merchants' Association   Limited,   Annual Report 1975.):—

Contract

Delivery order rate

Quantity tendered for delivery (Quintals)

November 1975

1,370

25

January 1976

1,270

50

March 1976

1,447

475

May 1976

1,514

500

July1976

1,710

600

September 1976

1,656

400

Bombay Oilseeds and Oil Exchange Ltd. The association under the present title was established on 19th July 1976. Prior to this, it was known as the Seeds Traders' Association which was registered under the Indian Companies Act, on 12th October 1938. The name of the Seeds Traders' Association was changed to the Bombay Oilseeds Exchange Limited on 24th April 1950. The Oil Merchants' Chamber Limited which was regulating trading in Vegetable oils was amalgamated with the Bombay Oilseeds Exchange Limited on 7th August 1956 and the name of the exchange was thereupon changed to the Bombay Oilseeds and Oil Exchange Limited on 8th November 1956. The Exchange was also recognised for forward trading in groundnut oilcake.

The Exchange was recognised by the then Government of Bombay for forward trading in oilseeds in 1950. The Forward Contracts (Regulation) Act, 1952 was applied to oilseeds on 25th January 1965: The Exchange has been recognised by the Government of India for forward trading in groundnut, castorseed, linseed, cottonseed, groundnut oil and groundnut cake (expeller) under the Forward Contracts (Regulation) Act, 1952. Trading in delivery contracts and ready contracts in oilseeds and oils is also being regulated by the Exchange. All forward trading in groundnut, groundnut oil, and cottonseed, have been suspended by the Government of India. Futures trading  is permitted only in castorseed and linseed which are non-edible oilseeds.

The membership of the exchange comprises crushers:, exporters, stockists, commission agents and brokers. At the end of the year 1963, the total number of members was 611, which decreased to 414 at the end of 1973 and stood at 416 at the end of 1975.

The members are divided into four panels i.e., crushers, exporters, dealers and brokers. At the end of 1975, there were 29 members in crushers' panel, 37 in exporters' panel, 92 in dealers' panel and 258 in brokers' panel.

The exchange is a member of the (i) Federation of Indian Chambers of Commerce and Industry, (ii) Indian Merchants' Chamber, (iii) Indian Standards Institute and (iv) Central Organisation for Oil Industry and Trade. The Exchange has an up-to-date and well-equipped analytical laboratory of its own which undertakes analysis of oilseeds, oils, oilcakes and allied products at reasonable rates. The laboratory of the Exchange is recognised by the Government for the work of grading under AGMARK of vegetable oils meant for export. The survey department carries out survey of oilseeds for determining or deciding their exact quality and grade. The Government has authorised the Exchange to issue certificate of origin in respect of shipment of oilseeds, oils and oilcakes exported to foreign countries. During 1974-75, eleven certificates were issued by the Exchange.

The terms and conditions imposed by the Forward Markets Commission on the Exchange in respect of hedge contracts 1975-76 are given in Table No. 23.

TABLE No. 23
Terms and Conditions imposed by the Forward Markets Commission in respect of
Hedge Contracts in 1975-76


Hedge contracts

Date of the
order giving
permission
and mention-
ing the terms and conditions

Date of commence
ment
of the hedge
contracts

Limit on
open position
for every
member
and non-member in
metric
tonnes.

Margin on long open position

Exemption to the exporters
in the hedge contracts against their export  commitments of castor oil, linseed oil and linseed cake from

First
marginal
line
on
closing
rate of
(Rs.)

Rate of
margin
per quintal
(Rs.)

Second
marginal
line on
closing
rate of
(Rs.)

Rateof
margin
per quintal
(Rs.)

Payment of margin
granted or not

Limit of 2,000
metric tonnes on
open positi on granted or not

1

2

3

4

5

6

7

8

9

10

Castorseed—

 

 

 

 

 

 

 

 

 

April 1975

22-8-74

23-8-74

2000

230

46

250

100

Granted

Granted

July 1975

29-3-75

31-3-75

2000

200

40

220

90

Do.

Do.

September 1975

13-6-75

17-6-75

2000

190

35

 

 

Do.

Do.

April 1976

19-8-75

20-8-75

2000

180

35

 

 

Do.

Do.

Linseed

 

 

 

 

 

 

 

 

 

April 1975

24-8-74

30-8-74

2000

350

70

375

150

Do.

Granted by order, dated the 6th February 1975

July 1975—

29-3-75

31-3-75

2000

280

56

300

120

Do.

Granted.

September 1975

13-6-75

17-6-75

2000

260

50

 

 

Do.

Do.

April 1976

19-8-75

20-8-75

2000

250

50

 

 

Do.

Do.

Note:—No margin free limit was granted.

 

The volume of trading in castorseed hedge contracts and linseed hedge contracts made by the Exchange during the year 1974-75 are shown below separately :—

(i) Castorseed Hedge Contracts

(Figures in '000 tonnes)


Month ending

April 1975

July 1975

September 1975

April 1976

November 1974

53.7

 

 

 

December 1974

64.2

 

 

 

January 1975

101.8

 

 

 

February 1975

122.6

 

 

 

March 1975

63.6

4.3

 

 

April 1975

8.5

78.4

 

 

May 1975

 

51.9

 

 

June 1975

 

43.6

8.7

 

July 1975

 

9.0

115.5

 

August 1975

 

 

89.5

19.0

September 1975

 

 

4.2

87.2

October 1975

 

 

 

118.8

Total   

414.4

187.2

217.9

225.0

(ii) Linseed Hedge Contracts

(Figures in *000 tonnes)


Month ending

April 1975

July 1975

September 1975

April 1976

November 1974

33 1

 

 

 

December 1974

63.5

 

 

 

January 1975

153.3

 

 

 

February 1975

201.8

 

 

 

March 1975

149.2

7.3

 

 

April 1975

6.7

119.8

 

 

May 1975

 

92.7

 

 

June 1975

 

100.7

636.3

 

July 1975

 

6.9

183.6

 

August 1975

 

 

99.4

23.2

September 1975

 

 

11.9

171.4

October 1975

 

 

 

222.1

Total  

607.6

327.4

931.2

416.7

The Following statement gives the average prices of groundnut oil in Bombay during October to November crop-year from 1962-63 to 1974-75:


Year

Average price per tonne  (Rs.)

1962-63

1,785

1963-64

2,138

1964-65

2,445

1965-66

3,988

1966-67

4,155

1967-68

2,957

1968-69

4,089

1969-70

4,685

1970-71

4,330

1971-72

4,013

1972-73

6,712

1973-74

8,096

1974-75

7,619

The castorseed hedge contract of April 1975 commenced on 23rd August 1974 On13th  November'1974, the ruling price of castorseed April 1975 hedge contract was Rs. 216.25. (Rates in this account are in Rs. per quintal.) The highest price of Rs.235 was recorded on 26th November 1974 and the lowest of Rs. 164.00 on 21st February The due date rate was fixed at Rs. 187.

The castorseed July 1975 hedge contract commenced on 31st March 1975 at Rs. 178.25. The highest price of Rs. 202.75 was recorded on 16th April and the lowest of Rs. 164.00 on 10th July 1975. The rate on the due date was fixed at Rs. 178.00.

The castorseed September 1975 hedge contract commenced on 17th July 1975 at Rs, 180.25. The highest price of Rs. 187.87 was recorded on 29th July 1975 and the lowest of Rs. 145.50 on 29th September on 1975. The due date rate was fixed at Rs. 145.00.

The linseed April 1975 hedge contract commenced on 30th August 1975. On 13th November 1974 the ruling price of the linseed April 1975 hedge contract was Rs. 341.25. The highest price of Rs. 345.50 was recorded on 26th November 1974, and the lowest of Rs. 224.50 on 21st February 1975. The due date rate was fixed at Rs. 266.00.
The linseed July 1975 hedge contract commenced on 31st March 1975 at Rs. 245.00. The highest price of Rs. 282.50 was recorded on 16th April 1975, and the lowest of Rs. 213.00 on 5th July 1975. The due date rate was fixed  at Rs. 242.00.

The linseed September 1975 hedge contract commenced on 17th June 1975 at Rs. 244.25. The highest price of Rs. 256.00 was recorded on 23rd August 1975 and the lowest of Rs. 215.50 on 7th July 1975. The due date rate was fixed at Rs. 235.00.

The castorseed April 1976 hedge contract commenced on 20th July 1975 at Rs. 170.25. The highest price of Rs. 172.00 was recorded on 23rd August 1975 and the lowest of Rs. 141.50 on 30th September 1975. At the end of the year, the ruling price for this contract was Rs. 151.25.

The linseed April 1976 hedge contract commenced on 20th August 1975 at Rs. 231 .00. The highest price of Rs. 237. 50 was recorded on 26th August 1975 and the lowest of Rs. 195.50 on 30th Septembei 1975. At the end of the year, the ruling price for this contract was Rs. 203.50.

The following data reveals the position of futures trading in castorseed at the Bombay Oilseeds and Oil Exchange :—


Month  ending

Delivery

Total Volume
of transactions
(in '000 tonnes)

Number of operations holding
open l position (in tonnes)

Total
open
posi­tion
(in '000
tonnes)

Proportion
of open position held by the  group above  500 tonnes (per cent)

Long

Short

Below
500

 

Above
500

 

Below
500

 

Above
500

Long

Short

1

2

3

4

5

6

7

8

9

10

October
1976

April
1977

107.9

97

3

130

1

9.8

26.7

15.2

November
1976

April
1977

88.1

38

7

130

2

11.1

78.4

18.8

December
1976

April
1977

82.5

18

6

152

6

16.6

88.2

43.2

The details of futures trading in linseed at the Exchange are given below: .


Month
ending

 

Delivery

 

Total
volume -
of tran-
sactions (in '000
tonnes)

Number of operations holding
open position

Total
open
position
(in '000
tonnes')

Proportion of open
position held by the
group above 200
tonnes
(per cent)

Long

Short

Below
200
tonnes

Above
200 tonnes

Below
200 tonnes

Above
200 tonnes

Long

Short

1

2

3

4

5

6

7

8

9

10

October
1976

April
1977

160.4

103

12

232

14

16.7

50.5

40.5

November
1976

April
1977

115.4

136

13

177

10

12.1

49.5

32.3

December,
1976

April
1977

89.2

113

6

101

8

7.5

32.6

35.5

East India Cotton Association : The association was established in 1922 to provide and maintain suitable premises for cotton exchange in the city of Bombay and elsewhere in India and to regulate administration  of the same; to provide forms of contracts and to regulate contracts; to settle by arbitration or otherwise disputes among cotton merchants; to establish and maintain clearing house; and to regulate the import and export of cotton and generally to control, and regulate the cotton trade in Bombay and elsewhere in India. The membership of the Association as on 21st March 1981 was 358.

The association is recognised under the Forward Contracts (Regulation) Act, 1952 on a permanent basis in respect of contracts in Indian cotton in the whole of India. However, the futures contracts otherwise known as hedge trading in cotton is not permitted since 1966. Transferable contracts which end in delivery and known as transferable specific delivery contracts which were allowed to be traded in Bengal Deshi have also not been permitted since 1976-77. At present (1981) non-transferable specific delivery contracts in cotton are permitted by the association with the concurrence of Forward Markets Commission. A clearing house is maintained for settlement of weekly/fortnightly differences and for passing on the tenders during delivery months. The surveys and appeal on Indian as well as foreign cotton are carried out under the blind survey system by whole-time paid sworn surveyors. The association is a signatory to the Universal Cotton Standards Agreement.

The trading in transferable specific delivery contracts by the association during 1971 and 1975 were as follows:—


Month

Cotton in bales

1971

1975

January

N.T.*

4,450

February

 

900

March

 

2,200

April

 

2,800

May

 

N.T.

June

 

600

July

 

N.T.

August

400

N.T.

September

4,500

400

October

8,700

700

November

10,800

1,000

December

17,000

200

Total

41,400

13,250

* N.T. == Non-Transferable.

There was no trading in cotton at Bombay uring the period February 1971 to July 1971.
During 1971, 1,26,782 bales of cotton was purchased and 1,31,348 bales of cotton was sold by the association.
The details of trading in cotton by the association under the non­transferable specific delivery contracts during April 1980 to September 1980 are shown below :—
(In bales of 170 kg. each)


Delivery

April 1980

May 1980

June
1980

July
1980

August
1980

September
1980

April 1980

33,645

 

 

 

 

 

May 1980

10,137

17651

 

 

 

 

June 1980

6,325

8,866

12,035*

 

 

 

July 1980

4,600

2,760

8,580*

13,463

 

 

August 1980

 

1,200

4,752

7,447

11,589

 

September 1980

 

 

 

5,750

4,358

253†

October 1980  

 

 

 

554

1,458

986†

November 1980

 

 

 

 

2,137

2,281†

December 1980

 

 

 

 

 

702†

* Revised.
† The figures are provisional and pertain to 15th September 1980.

Vanaspati Manufacturers' Association of India: The association was first constituted on an informal basis in 1936 with 8 members. During World War II, the association was recognised by the Government of India for negotiating supplies of vanaspati to the defence services and for distribution of scarce raw materials. Price control on vanaspati was introduced in October 1944. The association regularly furnished information to Government for fixing vanaspati prices. Vanaspati being the only processed oil, its prices had to be revised with changes in oil prices. In 1946, the association adopted a formal constitution as a result of which the membership increased from 21 to 51.

The association remained the primary instrument of consultation between Government and vanaspati manufacturing industry on price control, regulation of quality of vanaspati, research on vanaspati, etc.

In 1965, the Government of India decided to regulate non-transferable specific delivery contracts in groundnut oil because of their misuse for illegal speculative activities, and therefore, the association was recognised under the Forward Contracts (Regulation) Act, 1952 to regulate non­transferable specific delivery contracts of traders in groundnut oil. The association being an all-India body, the members enter into contract with any party in the country. Since October 1971 the Government suspended non-transferable specific delivery contracts in groundnut oil. The manufacturers are therefore required to buy groundnut oil only on ready delivery terms. In six years of regulation i.e., from 1965 to 1971,   the members of the association had purchased 906,300 tonnes of groundnut oil under transferable specific delivery contract.

During 1976-77, the membership of the association was 64, of which eight had their factories in Bombay.

The prices of groundnut oil in 1976 are given below :—

(Rs. per tonne)


Week ending

High

Low

3rd January 1976

4,950

1,825

7th February 1976

4,525

4,400

6th March 1976  

4,150

3,775

3rd April 1976

4,650

4,400

1st May 1976

4,550

4,475

5th June 1976

4,325

4,200

3rd July 1976

5,675

5,075

28th August 1976

6,450

6,450

4th September 1976

6,450

6,450

2nd October 1976

6,400

6,400

6th November 1976

6,400

6,350

4th December 1976

6,900

6,400

Top

WHOLESALE TRADE

Bombay being the largest trading and distributing centre, the whole­sale trade carried out here is also on the largest scale in the State. The peculiarity of the wholesale trade is mainly concentrated within Bombay city limits. However, a few persons are engaged in wholesale trade in western and eastern suburbs. The main reason for the concen­tration of wholesale trade mostly within the limits of Bombay city is the proximity of the area to railway termini of Central and Western railways and also to the Bombay Port which make the transport of bulky commodities very easy. The Airport at Santacruz, on the other hand, helps the transport of costlier or perishable goods in a short period. In the past the wholesale trade in specific commodities was concentrated only in specific areas of the city, which have remained unaffected even now.

In 1909, wholesale business in cloth was conducted mainly in Mulji Jetha Market, while that in copper at Pydhoni; in drugs at Ganeshwadi; in food-grains, sugar, ghee at Mandvi; in silver and gold on Sheikh Memon Street; and the trade in opium and machinery in Fort. There were about 40 big merchants in Bombay who used to deal in pearls.

Now, along with the old centres of wholesale trade in Bombay there is a tremendous increase in the number of centres and also in the quantity and variety of commodities traded on wholesale basis.

The wholesale trade in fruits, vegetables, mutton, eggs and flowers is mostly undertaken in municipal markets. ( For details of wholesale trade undertaken in these markets refer to a sub-section on 'wholesale markets 'in this Chapter.) At present the wholesale trade in vegetables is undertaken in three municipal markets of which two are at Byculla viz., Sant Gadge Maharaj Market and Sant Sawata Mandai, and one at Dadar near Plaza theatre. In addition, a private market at Byculla viz., Meher Market also deals in wholesale trade of vegetables. The wholesale business in fish is undertaken in a municipal market on Palton Road viz., Chhatrapati Shivaji Market; in eggs and mutton and flowers in Mahatma Jyotiba Phule (former Crawford) Market. The wholesale business in fruits is undertaken in two municipal Markets viz., Jyotiba Phule Market and Sant Gadge Maharaj Market at Byculla. The wholesale trade in cloth is now undertaken in Mulji Jetha Market, Mangaldas Market, Swadeshi Market, Hindamata Cut Piece Wholesale Cloth Market and its surrounding area; tobacco on Clive Street, motor parts and accessories on Jagannath Shankarsheth Road, i.e., Opera House and its vicinity, Huges Road, Queen's Road; consumer goods in 15 wholesale consumer stores; medicines at Dawa Bazar on Princess Street; food-grains and pulses at Dana Bunder near Masjid Road Station; perfumery on Mohammed Ali Road and its vicinity; hardware in Lohar Chawl, Null Bazar and Chor Bazar, Nagdevi Street and Abdul Rehman Street; jewellery in Zaveri Bazar; brass, copper and aluminium vessels at Tambakata, Mumbadevi and Mohammed Ali Road.

In addition to the aforesaid commodities, the wholesale business in a variety of articles is carried on in Greater Bombay. The following statement reveals the variety of such commodities traded on wholesale basis:


Commodities traded on wholesale basis

Wholesale trade centres in Greater Bombay

Glass bangles and plastic articles Books of all types

Null Bazar, Phule Market. Dhobi Talao, Girgaum Road, Dada-bhoy Naoroji Road.

Readymade      garments for children.

Zaveri Bazar, Bhuleshwar.

Cutlery

Lohar Street, Abdul Rehman Street, Jumma Masjid, Null Bazar, Chakala.

Crockery and pottery

Phule  Market,   Lohar   Street,   Null Bazar, Grant Road;

Show-pieces   and    presentable
articles.

Phule Market, Null Bazar.

Toys

Cutlery Market, Phule Market.

Dry fruits

Phule Market, Null Bazar, Grant Road,Masjid Bunder Road.

Distemper and oil paint


Abdul  Rehman  Street,  Null   Bazar,
C. P. Tank, Masjid Bunder, Nagdevi
Street, J. J. Hospital area.

Cotton

Sewri.

Film projection and Electronic
goods.

Opera House.

Dyes (for dyeing cotton fibre
and cloth).

Tambakata.

Coloured clay

Nagdevi Street.

Cycles and its spare parts

Kalbadevi Road,   Dadabhai   Naoroji
Road.

Electrical goods

Lohar Street.

Furniture

Mohammed Ali Road, Chor Bazar.

Shoes and leather goods

Carnac Road, Phule Market, Bhendi
Bazar, Pydhoni, Leather Bazar.

Account books

Pydhoni, Zaveri Bazar.

Mirrors

Abdul Rehman Street.

Guns

Abdul Rehman Street.

Handloom cloth   ..

Kalbadevi   Road,   Prarthana   Samaj,
Dadabhai Naoroji Road.

Hats

Dhobi   Talao,   Bori   Bunder,   Phule
Market.

Musical instruments

Dhobi Talao, Fort, Sandhurst Road.

Rubber packing material

Mohammed Ali Road, Chakala, Masjid
Bunder, Phule Market.

Weights, measures..

Nagpada, Mohammed Ali Road, Abdul
Rehman Street.

Mats of all types ..

Abdul Rehman Street.

Mattresses

Phule Market.

Pipes and plumbing material ..

Nagdevi Street, Lohar Chawl, Medows
Street.

Paper and cardboards

Sutar Chawl,, Abdul Rehman Street,
Parsi Galli,  Kandevadi.

Artificial flowers   ..

Phule Market, Charni Road.

Photo frames

Abdul Rehman Street.

Plywood, hardboard

Abdul Rehman Street.

Raincoat

Fort area, Phule Market.

Sports goods

Dhobi Talao.

Stoves

Phule     Market,     Pydhoni,     Abdul Rehman Street, Hamam Street.

Stainless steel utensils

Tambakata, Mumbadevi.

Stationery

Abdul Rehman Street.

Wood of all types

Reay Road, Tank Bunder.

Umbrellas

Phule Market, Abdul Rehman Street, Null Bazar, Old Hanuman Galli.

Time-pieces, watches and spare parts.

Abdul Rehman Street, Bhendi Bazar, Dadabhoy Naoroji Road.

Iron suitcases

Abdul Rehman Street.

Wires and Grills of all types

Abdul Rehman Street, Lohar Chawl, Null Bazar.

Silk cloth (art-silk)

Kalbadevi.

The Maharashtra Agricultural Farm Produce Corporation which was incorporated in 1970 as a subsidiary of the State Industrial and Investment Corporation of Maharashtra Limited, became an independent orga­nisation in 1972. Besides, the Maharashtra Agricultural Farm Produce Corporation deals in wholesale as well as retail trade of processed and unprocessed pork, poultry, buffalo meat, mutton, fruits and vegetables, fish.products and canned food. The corporation links the agricultural producer with the consumer in a fair price deal. In 1977, the corporation owned 18 farm fairs and 150 dealer outlets in Greater Bombay.

As per the 1951 Census 59,031 persons were engaged in different activities of Wholesale trade in Greater Bombay. The number of persons however, decreased to 44,129 in 1961. The percentage share of workers in whole­sale trade to total workers in commerce in 1951 and 1961 stood at 22 and 14.05, respectively. Even though the percentage share of workers in whole­sale trade in 1961 showed a decreasing trend, it surpassed the State average of 8.5 per cent and ranked first in all the districts of the State. The 1971 Census classified the wholesale trade in five major groups and enumerated 41,270 persons (Census of Maharashtra, 1971, Industrial Classification) as engaged in wholesale trade in the city.

The group-wise classification of persons engaged in wholesale trade in Greater Bombay in 1971 is shown in the following statement:—

Group

Total

Percentage of workers in the
group to the total in wholesale trade

Employers

Employees

Single workers

Family workers

1

2

3

4

5

6

7

(1) Wholesale    trade    in food,    textiles,     live animals,      beverages and intoxicants.

11,055

26.8

3,110

5,685

1,685

575

(2) Wholesale    trade    in fuel, light, chemicals, perfumery,   ceramics, glass.

6,150

14.9

2,010

3,145

715

300

(3) Wholesale    trade     in wood,    paper,    other fabrics, hide and skin and inedible oils.

5,780

14.0

1,060

4,090

450

180

(4) Wholesale trade in all types    of    machinery and equipment inclu­ding    transport    and electrical equipment.

3,170

7.7

860

1,810

345

155

(5) Wholesale    trade      in food     and   miscella­neous manufacturing.

15,115

36.6

3,905

8,600

1,850

760

Total

41,270

100.00

10,945

23,330

5,045

1,970

The percentage share of workers engaged in five major groups men­tioned above reveals that the wholesale trade in food and miscellaneous manufacturing ranked first 36.6 whereas the wholesale trade in all types of machinery and equipment including transport and electrical equipment ranked last (7.7) in the list. The classification of persons engaged in wholesale trade by class of work reveals that the percentage of employees to total workers stood at 56.28 which was the highest in all the groups. The class of employers i.e., those who hired one or more persons accounted for 26.27 per cent of the total persons engaged in wholesale trade in Greater Bombay. The tendency to engage the family members in the activities of wholesale trade was very rarely found and accounted for only 4.77 per cent of the total. The class of single workers i.e., those who are participating in the activities of wholesale trade without employing others except casually and without the help of other members of the family except casually accounted for 12. 22 per cent of the total.

The percentage of wholesale business establishments in Greater Bombay in 1971 to the establishments of wholesale trade in all the urban areas of the State in 1971, reveals the concentration of wholesale trade activities in Greater Bombay. There were in all 10,541 establishments (Census of India, Series II-Maharashtra, Part III-B; 1971.) dealing in wholesale trade of various commodities as against 20,709 establishments dealing in wholesale trade in urban areas of the State. The same accounted for almost 50 per cent of the total establishments dealing in wholesale trade in urban areas of the State. This percentage reveals that Greater Bombay occupies an important position in the volume of wholesale trading in the State. The following statement shows the number of establishments (The Census of India,   1971,   Establishment  Tables, defines establishments of wholesale trade as those trade places where people work in a building.) dealing in wholesale trade of different commodities and persons engaged therein:—


Category

Establishments

Total

1
Person

2-9 Persons

10-19 Persons

20 and above

persons unspecified

(1) Wholesale Trade in food, textiles, live animals, beverages and intoxi­cants.

4,977

661

3,888

361

66

1

(2) Wholesale trade in fuel,    light, chemicals, perfumery,   ceramics, glass.

1,335

118

1,077

107

33

 

(3) Wholesale trade in wood, paper, other fabrics, hide and skin and inedible oils.

615

93

451

45

26

 

(4) Wholesale trade in all   types   of machinery and  equipment including    transport    and   electrical equipment.

1,108

165

779

116

46

2

(5) Wholesale  trade   in   food   and miscellaneous manufacturing.

2,506

408

1,928

138

28

4

Out of 12,451 wholesale trade establishments dealing in food, textiles, live animals, beverages and intoxicants in the urban areas of the State in 1971, Greater Bombay alone accounted for 39.97 per cent. Of 1993 wholesale establishments dealing in fuel, light, chemicals, etc. in urban areas of the State, 1335 or 67 per cent were situated in Greater Bombay. A still higher percentage of 85.49 was recorded in wholesale trade establishments dealing in machinery, including transport and electrical equipment as there were 1,108 establishments in Greater Bombay, out of 1,296 in the urban areas of the State. In other two major groups, viz., wholesale establishments dealing in wood, paper, other fabrics, hide and skin and inedible oils; and those dealing in food and miscellaneous manufacturing, Greater Bombay showed higher percentage of 54.32 and 67.35 per cent respectively.

Wholesale Markets(The information pertains to the year 1976): The wholesale business in fruits, vegetables, fish, eggs, fowls and mutton is undertaken in various municipal markets as also in some private markets.

The wholesale trade in fruits is now undertaken irj two municipal markets : Sant Gadge Maharaj Market or the Gold Mohur Castle Market, Byculla, and Mahatma Jyotiba Phule Market, formerly known as Arthur Crawford Market. The wholesale transactions of vegetables are undertaken in three municipal markets viz., Sant Gadge Maharaj Market, Sant Sawata Mandai at BycuUa, and Dadar (new) market, and a private market viz., Meher Market.

The wholesale transactions in fish are carried in Chhatrapati Shivaji Market on Palton Road, and in eggs, fowls, and mutton in Mahatma Jyotiba Phule market.

New Dadar Market : It was established in 1963 behind Plaza theatre, and covers an area of about 1,875 sq. metres.
About 5,000 consignments of vegetables excluding fruits arrive daily in the market in bags and baskets. The vegetables mainly arrive from Pune, Saswad, Chinchwad, Jalgaon, Nasik, Delhi etc. by trucks or by railway.

The functionaries in the market include 217 licensed stall-holders, 13 hundekdris and brokers. The broker charges 6 to 8 per cent as commission rate and has to pay Rs. 50 per annum as licence fee. The rent charged for the stall-holder varies from Rs.185 to Rs. 600 per quarter. Besides, there are 60 spaces which are allotted to the traders on daily charges, the daily charges for space being 50 paise.

Sant Sawata Mandai : Sant Sawata Municipal wholesale market was constructed in 1968 on an area of 1,031 sq. metres near Jijamata Garden, Byculla.

Almost all types of vegetables arrive in the market from Pune, Nasik, Sangamner, Junnar, Saswad, Indore, Delhi, Ahmedabad, Bangalore, etc. Daily 6,000 bundles of vegetables of all types including pumpkin, snake gourd, elephant gourd, red pumpkin, cucumber, cabbage, carrots, etc. arrive in the market. Besides, seasonal leafy vegetables such as fenugreek, coriander and radish also arrive in the market. The vegetables are sold in bulk such as a basket or a gunny bag. It is an open market and as such no hatta system is allowed in the market.

The market is equipped with 15 underground godowns and 15 pedhis. The rent of a godown varies from Rs. 180 to Rs. 340 per annum, while the rent of a pedhi varies from Rs. 180 to Rs. 300 per annum. Besides the market is equipped with 10 spaces given to sellers on daily charges. As many as 234 persons are given the licences to receive the commodities from 11 hundekaris through coolies. The rate of commission charged by the broker on the sale of commodities is 8 per cent. The broker has to pay licence fee of Rs. 250 per annum to the market authority.

The weighing charges fixed by the Municipal Corporation on the arrival of the commodities are similar to those fixed in the Gadge Maharaj market. About 100 trucks arrive daily in the market and the commodities from these trucks are distributed to three markets in Byculla and a wholesale market at Dadar.

Sant Gadge Maharaj Municipal Market : Sant Gadge Maharaj market is a wholesale fruit and vegetable market situated near Byculla bridge on its west side. The market then known as Gold Mohur Castle market was opened by the Bombay Municipal Corporation in 1939 covering an area of 8,309 sq. metres.

Almost all kinds of fruits, sugarcane and vegetables arrive in the market.

The market consists of 300 permanent vegetable stalls and 200 permanent fruit stalls. Besides, there are 100 kothimbir (coriander leaves) and leafy vegetable sheds. The trader in a permanent stall has to pay monthly rent varying from Rs. 20 to Rs. 200 and a trader in temporary stall has to pay fifty paise.

The total number of sellers in the market are about 700, of whom 500 are licensees and 200 squatters. A licensee has to pay Rs.50 per year as the licence fee to the Bombay Municipal Corporation. Besides, there are 100 hundekaris and hamals. The brokers play a vital role in the market activities as they act as a link between the agriculturists and the sellers. About 500 persons act as brokers in this market and charge 8 per cent commission rate. The broker has to pay weighing charges to the Municipal Corporation for the commodities brought by him in the market, the charges varying from 10 to 20 paise per bag below 40.kg. and Rs. 15 for a load of lorry.

The daily average arrival of commodities in this market is shown below:—


Type of commodity

Weight

No. of baskets arriving daily in the market

Vegetables

 

Below 40 kg.

450

Above 40 kg.

550

Fruits

 

Below 40 kg.

5,500

Above 40 kg.

750

Besides, on an average 5 lorries of sweet lime and oranges, 5 lorries of banana and 10 lorries of sugarcane arrive in the market daily.

The sale of fruits accounts for about 75 per cent of the daily arrival and the sale of vegetables accounts for about 90 per cent of the daily arrival.

Shri Chhatrapati Shivaji Market: Shri Chhatrapati Shivaji municipal fish market was started in a newly constructed building opposite Mahatma Phule market in 1971 covering the carpet area of about 3,251 sq. metres. A fish section of the Mahatma Phule market was also shifted in the same year. The proposal for shifting the wholesale fish section in a separate building was put forward formerly in the Development Plan for Greater Bombay prepared by the Bombay Municipal Corporation in 1964.

The fish market is on the ground floor of the building, while the other floors are occupied by different municipal and government offices. The market includes 22 fish pedhis, 6 ice stalls, 4 outside shops, 1 canteen and a waiting room. Besides, the market provides for 24 spaces which are hired on daily basis. The fish arrives in the market from the seashores in Bombay such as Versova, Vasai-Arnala as also from ports outside the limits of Greater Bombay such as Jamnagar, Bharucha, Ratnagiri, Goa, Karwar, etc. The daily total turnover of the market amounts to about Rs. 2 lakhs. The income of the market through taxes amounted to about Rs. 5 lakhs during 1975-76; while the expenditure on maintenance amounted to about Rs. 1 lakh and 50 thousand.

The retail trader has to pay 25 to 50 paise per basket as municipal charges; while the wholesaler has to pay 60 paise for a big basket, 30 paise for a small basket and Rs. 60 for a full lorry.

Ghamaji Manaji Market: This municipal wholesale plantain market was established in the year 1948 in a cattle shed near Byculla railway station. The area occupied was 1,46,659 metres. As the market was inadequate an adjoining area of 1,185 sq. metres was designed for the expansion of the market in 1964. The market is equipped with 33 stalls and 14 spaces.

Jyotiba Phule Market {Arthur Crawford Market) : The market was built upon a triangular plot of land, bounded by Carnac, Palton and Dadabhai Naoroji Road in 1865 at the cost of Rs. 19,49,700. It was named after the then Municipal Commissioner, Arthur Crawford. The fruit and the vegetable section of the market was opened on the 16th January 1868, whereas the beef market was opened in 1869. The market was completely opened for the Bombay populace in 1869. The market contained 888 rent payers' compartments out of which 765 were occupied in 1909. It consisted of three divisions, the green and general market with the Superintendent's office, and the clock tower, 120 feet high, situated on the north-west; the godowns, the purveying shops and fowl rooms on the south. The green and general market was divided into a fruit section and vegetable section, the central portion of it being surmounted by a clock. The fruit section was in the masonry wing and was equipped with 171 stalls in 1909, the larger number of these were the fruit stalls and the rest were the flower stalls. The vegetables section of the market was situated in the iron wing and was equipped with 401 stalls. Besides, vegetables of all kinds, flour, grain, bakery products, confectionery, groceries, sugar, stationery, cutlery, hosiery, footwear and many other fancy goods were also traded in this wing. The mutton and the beef sections situated on the other side of the Central garden were divided into three sections viz., the Mundi or head bazar, the fish and mutton market and the beef market. The fish and beef sections comprised 119 and 84 stalls, respectively. At the western end of the market was a covered weighing shed, where consignments arriving in the market were first weighed before being distributed to the stalls for sale.

Arthur Crawford market was renamed after Mahatma Jyotiba Phule in 1962. The market is now equipped with wholesale and retail sections for fruits, eggs, beef and mutton as also with fowl rooms, bird-shops, godowns, cold storage and many other Sections such as grocery, stationery, bakery products, leather wear, footwear, etc. It now covers an area of about 22,472 sq. metres. It is rightly said that one could get anything from pin to peacock in this market. The fish section of the Mahatma Jyotiba Phule Market was shifted in the newly constructed Shri Chhatrapati Shivaji Maharaj market in 1971. The wholesale transac­tions in the market in respect of mutton, beef, poultry, and eggs meet the demands of a large number of retail markets in the southern and central parts of the city. The wholesale trade in fruits takes place on a large scale. Quality fruits like Alphonso mangoes are exported to foreign countries.

In 1922, a refrigeration and cold storage building was also constructed in the market premises for the proper storage and preservation of perishable articles especially fish, fruit and meat.

The cold storage plant (The cold storage plant at Jyotiba Phule Market has been demolished  (1985) and a new cold storage at Chhatrapati Shivaji Market is under construction) consisted of three chambers, one for storing fish at 28°F to 31°F; one for mutton at 30°F to 37°F and one for vegetables etc. at 35°F to 40°F. The area of cold storage chambers was 1,677 sq. metres with a storing capacity of 21 tons of fish or 33 tons of fruits. The approximate quantity of perishable goods deposited and the amount realised during 1965-66,1970-71 and 1972-73 are given below:—


Commodity

Quantity deposited (Kg.)

Amount realised (Rs.)

1965-66

1970-71

1972-73

1965-66

1970-71

1972-73

Fruits   and vegetables.

14,13,000

18,70,400

12,43,300

 

 

47,990

 

 

 

 

34,570

 

 

 

 

17,869

 

 

Mutton

5,00,500

2,36,400

1,40,258

Fish

20,65,000

8,80,700

88,035

Eggs

6,74,200

4,90,800

38,792

Milk and milk products.

3,28,000

1,10,800

N.A.

Wholesale Fruit section at Mahatma Phule Market: This is known as Scale Shed and includes 8 sheds, spaces and a passage covering an area of 86,428.12 sq. metres. In this section, the brokers are charged entrance fee against the consignment received by them. The brokers recover entrance fee from the growers while paying them the value of the produce. These brokers are not charged any rent for the space they occupy, while the sub-brokers are charged rent for the space they occupy, at the rate of 25 paise per day, per unit of 3' x 3'.
The brokers charged about 10 per cent as brokerage during 1974-75.


Licence fee

Brokers

Rs. 100

 

Sub-brokers

Rs.    75

 

Hundekaris

Rs.  100

 

Empty collectors

Rs.   50

Entrance fee

Per parcel upto 40 kg.

15 paise

 

Per parcel above 40 kg.

25 paise

 

Lorry containing loose stuff ..

Rs.    30

 

Cartload loose stuffs

Rs.     3

Space charges
per

Sub-broker, empty collector,

25 paise per unit

day.

parcel packers and space

of   3'   X   3'

 

for storage.

Rs. 10.

Encroachment fee

 

Rs. 10.

From October 1974 to September 1975, about 70,91,120 baskets of fruits were received in the section. About 34 different types of fruits arrive in the market from various fruit-growing areas in the country.

In 1975-76, the licence fee recovered in the scale shed section amounted to Rs. 86,175, while the total amount recovered as entry fee, space charges and encroachment charges amounted to Rs. 16,31,370.50.

In 1975-76, there were about 6,500 persons working in this section in various capacities such as brokers, sub-brokers, hundekaris, empty collec­tors, servants etc. Besides, about 100 handcarts and 15 transporters used to carry the commodities from this market and supply the same to various markets in Greater Bombay. The staff of the section comprised one Head Inspector, 16 Inspectors, 12 peons, 28 labourers and 2 mukadams.

Deonar Abattoir (The information pertains to the year, 1976-77): The Deonar Abattoir was commissioned on 16th August 1971 and after demolition of the slaughter house at Bandra in April 1973, all the units were shifted to Deonar. It is the most modern and biggest abattoir in the country. The abattoir at Bandra was established in 1865, the area then being outside the limits of the city of Bombay.

Since commissioning of the Abattoir at Deonar, all the municipal and private slaughter houses and various slaughtering chambers attached to the municipal markets have been closed and all the slaughtering opera­tions are done by the butchers absorbed in the municipal Abattoir. This fully modernised slaughter house complex, for its various slaughter­ing and processing operations, is equipped with necessary up-to-date mechanical and electrical equipments and has rendering plants and ancillary industrial units.

The various types of plant and machinery installed in the Abattoir and cost thereof is shown below :—

 

Type of Plant and Machinery
installed in the Abattoir

Total cost
(Rs.)

(1)

Slaughtering machinery and electric equipment (imported).

56,40,483.00

(2)

Slaughtering machinery and electric equipment (indigenous content).

67,27,360.00

(3)

Suction tanks and pumps

4,83,176.00

(4)

High and low pressure pumps

2,58,707.00

(5)

Hot and cold water pipe-line system

17,77,780.00

(6)

Waste treatment plant    

7,49,677.00

The Abattoir is spread over a spacious land of 51 hectares with the main slaughter house structure built on virgin land. Of this, 8.5 hectares are utilized for the layout of slaughtering units with attached pens, rendering plants, administrative building, pumping station, waste treatment plant, laundry, laboratory and stores building and meat-van garage. 7.7 hectares are utilised for live-stock markets; 9.7 hectares are being separately developed as grazing yard-cum-resting ground; 5.26 hectares occupied by peripheral roads varying from 18m. to 27m. in width. Besides 1.82 hectares, are proposed to be utilised for providing quarters to the administrative and executive staff on the west and 3.43 hetcares are proposed to be utilised for providing 900 staff quarters for the slaughter house workers on the east of the slaughter house compound. On the north side of the slaughter house, 14.56 hectares of land is reserved for setting up ancillary industries of various products of the slaughter house and the plots are being offered to prospective industrial concerns.

The following statement gives information regarding various units and their slaughtering capacity:—

 

Unit

Date of commissioning of units at Deonar Abattoir

Slaughtering capacity

(1)

Pig unit

16-8-1971

100 pigs in 6 hour shift.

(2)

Cattle unit (Kurla)..

9-1-1972

300 cattle in one shift of 6 hours.

(3)

Cattle unit (Bandra).

7-5-1973

....

(4)

Jhatka unit

13-1-1972

100 sheep and goats in one shift.

(5)

Jewish unit

14-3-1972

200 sheep and goats and 4  cattle  heads   in   one shift.

(6)

Main sheep and goats units (Bandra).

12-5-1973

600 sheep and goats  on 3 lines per 8 hours shift.

(7)

Emergency   slaughtering unit.

N.A.

100 sheep and goats in one shift.

(8)

Emergency        cattle slaughtering unit.

N.A.

10 heads of cattle in one shift.

On an average, 6900 sheep and goats worth Rs.9 lakhs are slaughtered per day. The total sale value of 650 horned cattle slaughtered here per day amounts to about Rs. 5 lakhs, whereas the total sale value of 50 pigs slaughtered per day comes to about Rs. 6,000.

The stunning arrangement for horned cattle is by captive bolt method, whereas the stunning of sheep and pigs is done by electricity. Main slaughtering unit is provided with the most modern slaughtering facilities with human method of slaughtering. Besides this general unit, where halal method of slaughtering is followed by Muslims, other ritual slaughtering houses to meet the requirements of other religious practices are also maintained.

The basic practices of slaughter houses adopted in all modern slaughter houses of Internationa] standards, are fully observed at Deoriar. Separate arrangement is made to ensure maximum standards of hygiene. At various points on the dressing floor as well as other operational centres, laboratory and sterilizer units are provided within the reach of every operator for sterilizing his knives and other instruments.

All the slaughtering units are provided with individual hanging halls for accommodating number of animals slaughtered in the respective units The main sheep and cattle units are provided with chiller units and chiller stores at 10°C for accommodating 5 tons i.e., five per cent of the daily output for fifteen days. Similarly a freezer unit at freezer stores at 15°C is provided for about 5 per cent of daily output.

Meat carcasses are brought from their hanging hall to delivery hall by means of lowerators. Inter-connecting overhead rail work is provided so that meat carcass from one rail can be transferred to other rail. Telesco­ping loading rails are provided for loading the meat into the meat van.

A fleet of 45 meat delivery vans transport the meat from the Abattoir to the various meat markets and meat shops at prominent places.

The rendering plants—blood rendering, edible rendering and inedible rendering are housed in a separate building along with the boiler unit. The steam required in the rendering plant and for converting cold water into hot water is generated by means of 4 automatic packaged type boilers, each having a capacity of 200 H.P. with an evaporation rate of 6900 lbs. steam per hour at 150 lbs. pressure. A separate 60 H.P. boiler is provided for supplying steam to Jewish jhatka and pig slaughtering unit.

A very well-equipped pumping station with two spacious storage tanks of 4 lakh gallons each, 3 high pressure pumping units, 2 lowpressure pumping units and one separate fire-fighting unit with a separate storage tank with the capacity of 30,000 gallons are provided. A separate waste treatment plant comprising of mechanical settling tank and manual hopper unit is also provided on the north side of the slaughter house.

The main market functionaries in the abattoir are dealers of animals, brokers, shroffs, caretakers of animals, butcher licensees, etc. The brokers and the shroffs levy a commission of Rs. 1.40 per sheep and goat sold through them and they share the same equally. The gawals charge Rs. 1 per sheep and goat per day for taking care until the same are sold. The brokerage charge for a big animal is Rs. 5 per animal.

The licence fee for the cattle broker, shroff, sheep and goat broker and skin and hide dealers is Rs. 500 per annum, respectively. The licence fee per annum for the gut dealer (mutton) are Rs. 350 and Rs. 300 respectively. The cattle as also the sheep-goat dealer has to pay Rs. 100 per annum.

As a result of the up-to-date modern amenities available at Deonar Abattoir, and the highest standard of hygienic conditions maintained therein, the export of buffalo-meat has been tremendously increased. The cattle unit is required to run in two shifts and the total number of the animals slaughtered per day is over 550 cattle. Of these, nearly over 150 carcasses of buffaloes are daily exported to the Middle East countries, by the refrigerated cargo ship. Government, on an average, earns foreign exchange of over a lakh of rupees every day from export of buffalo-meat. MAFCO, a State Government enterprise, also continues to export mutton and beef procured from the Abattoir to Middle East and other countries. Since 1974-75, the export of mutton by air to Middle East countries has increased prodigiously and during that year, about 835 tonnes of mutton was exported from the Deonar Abattoir. During 1975-76, the export of meat increased tremendously especially in case of chilled mutton which was mainly air-lifted and the country has gained the foreign exchange worth Rs. 5 crores from these exports.

A number of major pharmaceutical concerns like Messrs. Sandoz Ltd., Messrs. Griffon Laboratories, Messrs. Haffkine Institute and many others are taking benefit of the facilities provided at the Abattoir to collect various glands and other products, etc., for manufacturing important medicines. A demonstration-cum-training centre for processing guts, started by the Government of India continued the training programme successfully. The blood powder produced at inedible plant was of inter­national standard. However, the production thereof had to be suspended since January 1976 as it ceased to be profitable.

The income and expenditure of the Abattoir during 1976-77 amounted to Rs. 2,03,19,576.46 and Rs. 1,55,08,410-81, respectively.

Wholesale Stores : The wholesale consumer co-operative stores play a vital role in the co-operative movement in general and wholesale trade in particular in Bombay.

While some of the municipal markets in Greater Bombay are engaged in the wholesale trade of vegetables, fruits, mutton, fish, etc, the whole­sale trade in consumer goods is undertaken by private wholesalers and the co-operative wholesale stores. The latter are registered with the District Deputy Registrar of Co-operative Societies, Bombay. There are in all 15 wholesale co-operative consumer stores in Greater Bombay of which 10 are State sponsored.

Even though, these stores are registered as wholesale stores, they also transact retail trade of consumer goods. These stores deal in wholesale and retail sale of both controlled and also non-controlled commodities. They are generally overcrowded by consumers as all types of consumer goods are available here at cheaper rates than in the shops of private dealers. This results in the large sale of commodities as can be seen from Table No. 24.

TABLE No. 24

Working of the Wholesale Consumer Co-operative Stores in
Greater Bombay as at the end of June 1976

(Rs. in Thousands)

Name of the wholesale store

Total

Number of stores

Number of branches

Membership

Paid-up
capital (Rs.)

Deposits (Rs.)

Those doing
processing activities

State
sponsored

Total

Department
stores

Others

1

2

3

4

5

6

7

8

9

10

(1)

Mumbai Kamgar

2

1

1

23

2

21

8,699

19.59

17.52

(2)

Supari Baug

1

 

1

8

 

8

3,489

4.14

1.92

(3)

Ishanya Mumbai

1

 

1

13

 

13

2,655

1.11

0.00

(4)

Mastan Baug

1

 

 

3

 

3

1,087

1.25

0.38

(5)

Rashtriya Mill Mazdoor

1

 

 

 

 

 

1,201

1.19

0.00

(6)

Kalavihar

1

 

1

10

1

9

2,689

3.21

4.97

(7)

Shri Vaibhav

1

 

1

12

1

11

5,219

9.66

0.56

(8)

Laxmi

1

 

1

12

 

12

2,844

7.40

 

(9)

Sahyadri Sahakari

1

 

 

3

 

3

1,021

0.44

 

(10)

Colaba Central

1

 

1

2

2

 

8,887

14.97

0.74

(11)

North Bombay

1

 

1

1

1

 

6,926

15.00

11.73

(12)

Pragati Mandal

1

 

 

5

 

5

13,711

5.59

3.78

(13)

South India

1

 

 

1

7

 

7

10,776

 

4.26

 

6.85

 

(14)

Bombay University

1

 

1

 

 

 

163

2.68

 

(15)

Chembur Central

1

 

 

 

 

 

1,450

0.70

0.32

 

Total

16

1

10

99

7

92

70,817

91.19

48.77

 

TABLE   No. 24-   -contd.

(Rs. in Thousands)

Name of the
wholesale store

Total
liabilities

Working
capital

Total
assets

Purchase

 

 

Sales

Wholesale
non-
controlled

Total
sales

Of which
sales through
Department
stores

Food grains

Sugar Others

 

(Rs.)

(Rs.)

(Rs.)

(Rs.)

(Rs.)

(Rs.)

(Rs.)

(Rs.)

(Rs.)

(Rs.)

 

1

11

12

13

14

15

16

17

18

19

20

(1)

Mumbai Kamgar

141.22

142.43

142.43

1,109.03

1,159.39

364.91

440.23

59.78

0.82

19.36

(2)

Supari Baug

17.76

18.52

18.62

140.82

143.71

 

4.70

0.80

0. 11

31.04

(3)

Ishanya Mumbai

8.55

8.93

8.33

305.30

307.65

 

179.88

 

 

 

(4)

MastanBaug

2.23

2.47

2.47

19.59

20.53

 

 

 

 

 

(5)

Rashtriya Mill Mazdoor

1.21

1.21

1.21

 

 

 

 

 

 

 

(6)

Kalavihar

16.88

14.91

14.91

83.28

87.39

 

41.26

 

 

 

(7)

Shri Vaibhav

35.58

34.62

34.62

204.47

210.33

5.82

84.42

11.34

 

5.80

(8)

Laxmi

24.45

24.63

24.63

128.43

134.07

 

7.35

 

 

 

(9)

Sahyadri

1.65

1.79

1.79

20.28

20.48

 

 

 

 

 

(10)

Colaba Central

76.21

83.34

83.34

357.39

372.12

340.88

31.24

 

 

 

(11)

North Bombay

65.11

55.08

55.08

212.00

384.00

150.00

46.00

15.00

 

34.00

(12)

Pragati Mandal

20.55

21.75

21.75

356.95

363.80

 

203.47

26.08

 

97.76

(13)

South India

50.16

43.32

43.32

71.45

89.51

 

4.23

0.59

0.10

17.36

(14)

Bombay University

7.98

8.00

8.00

12.00

13.01

 

 

 

 

 

(15)

Chembur Central

1.26

1.29

1.29

8.15

7.62

 

 

 

 

 

 

Total  

471.80

462.24

461.74

3,029.14

3,213.63

861.61

1,012.78

113.59

1.03

205.32

TABLE   No. 24-   -contd.

(Rs. in Thousands)

Name of the wholesale store

Sales

No. of
fair price

shops

Profit

Loss

No. of
-   stores without
profit or loss

Retailed controlled

Retail non-controlled
(Rs.)

No. of
stores

Amount
(Rs.)

No. of
stores

Amount
(Rs.)

Food-grains (Rs.)

Sugar (Rs.)

Others (Rs.)

 

1

21

22

23

24

25

26

27

28

29

30

(1)

Mumbai Kamgar

114.49

0.86

 

158.94

19

1

1.21

 

 

 

(2)

Supari Baug

30.12

 

 

76.94

6

1

0.86

 

 

 

(3)

Ishanya Mumbai

107.83

 

8.47

11.47

12

 

 

1

0.22

 

(4)

Mastan Baug

11.27

 

 

9.26

1

1

0.24

 

 

 

(5)

Rashtriya Mill Mazdoor.

 

 

 

 

 

 

 

 

 

1

(6)

Kalavihar

 

 

 

46.13

 

 

 

1

1.97

 

(7)

Shri Vaibhav

54.49

2.00

4.80

41.66

6

 

 

1

1.96

 

(8)

Laxmi

6.96

 

 

119.76

2

1

0.18

 

 

 

(9)

Sahyadri

16.10

 

 

4.38

3

1

0.14

 

 

 

(10)

Colaba Central

 

 

 

 

1

1

7.13

 

 

 

(11)

North Bombay

 

 

 

39.00

1

 

 

1

10.03

 

(12)

Pragati Mandal

36.49

 

 

 

5

1

1.20

 

 

 

(13)

South India

34.73

 

 

32.10

 

 

 

1

6.84

 

(14)

Bombay University

 

 

 

13.01

 

1

0.02

 

 

 

(15)

Chembur Central

 

 

 

7.62

 

1

0.03

 

 

 

 

Total

412.48

2.86

13.27

560.27

56

9

11.01

5

21.02

1

Agricultural Produce Market Committee, Bombay : Being a metro­politan city and terminal market in the State, agricultural produce from all corners of the State and also from outside the State is consigned to Bombay either for sale or export. Before the establishment of the agri­cultural produce market committee in Bombay, the trade was solely in the hands of commission agents and big traders. There were no regula­tions or restrictions on the sale of agricultural produce. Moreover while selling agricultural produce, the commission agents used to sell it by secret system (hatta system) and not by open auction. In the circumstances the agriculturists or consignors were always kept in dark about the rates quoted in the sale transactions by the commission agents and purchasers. There was no restriction on the commission agents so far as charging the commission and deducting various amounts from the sale proceeds.

As such, it was a matter for consideration before the Government as to whether the market committee should be established for Greater Bombay under the provisions of the Maharashtra Agricultural Produce Marketing (Regulation) Act, 1963. This Act could not be implemented earlier in Greater Bombay as the traders' community was totally against the regulations of transactions in agricultural produce. However market committee was established and started its functioning from 1st March 1977.
This market committee has removed the secret system. The sales are made by open auction system or by one of the systems as envisaged in rules. Besides, the unusual deductions are not allowed in the market. The committee also takes care to remit the sale proceeds to the agricul­turists and consignors at the price obtained in the open auction after deducting legal charges. The weighment or measurement is done in the presence of licensed weighmen. The commission agent in the market has to charge at the prescribed rate of commission. In the market committee, the bills, account slips, and goods receipts are prepared and sent to the respective persons and weighment slip is prepared on the spot while delivering the commodity to the purchaser.
The market committee consists of 28 members, representing agricul­turists from the State, nominees of the Bombay Municipal Corporation, traders and consumers.
The committee has implemented the regulation of wholesale transactions of onions and potatoes with effect from 1st March 1977, that of Santra (orange) and Mosambi from 1st April 1977 and of mangoes from 1st July 1977.
In 1977 Maulana Azad Road Maiket (onions and potatoes), Sant Sawata Mandai (onions and potatoes), Mahatma Jyotiba Phule market {Santra, Mosambis and mangoes) and  Sant  Gadge Mabaraj   Market {Santras, Mosambis and   mangoes) had been declared as  sub-market yards in addition to the main market yard at Washi (MAFCO marke ).
The market functionaries operating in these markets are commission agents, purchasers (traders), assistants of commission agents and traders, hamate, weighmen, hatha-gadiwalla, hundekari, etc., and they are supposed to obtain licences from this committee, and to renew them every year.
Wholesale Trade in some important commodities : (1) Paper : With the continuous and substantial drop in imports, the dealers in paper trade had to switch over from imported stuff to indigenous goods. As a result, the fortunes of paper trade are interlinked with the fortunes of paper industry in the country. The main sources of supplies are from paper manufacturing units located in different places in the country such as Ballarshah in Maharashtra State, Jagadhari, Dandeli etc.
The wholesale trade establishments of paper are concentrated in Sutar Chawl and on Pherozeshah Mehta Road in Bombay. As per the 1971 Census, 845 persons were engaged in the different activities of wholesale trade in paper and other stationery articles in Bombay.
(2) Textiles : The wholesale tiade in textiles depends entirely on the textile mills located in Bombay as also outside Bombay such as those located in Hyderabad, Ahmedabad, Mysore, Madras, Bangalore, Calcutta and Delhi.
All types of textile fabrics are obtained by the wholesalers and semi-wholesalers from the manufacturers and in turn by the retailers from these wholesalers and semi-wholesalers. The commission agent acts as an intermediary for financing semi-wholesalers and retailers.
The wholesalers are doing the business on their own and therefore are keeping a margin of profit according to competitiveness of the product, but in no case the margin of profit is less than seven per cent. A commission agent on the other hand receives about one per cent commission from the wholesalers which is included in the margin of profit of the wholesaler.
The turnover of wholesalers and semi-wholesalers exceeds about 500 crores of rupees per year.
The wholesale traders, who get their supplies from the textile industry, have to depend on credit facility for selling the goods. Even though, the duration of credit is extended to more than six months, the payment is not received from the retailers. On the other hand the wholesalers do not get their supplies from the mills without clubbing. In fact many a time, textile mills force the wholesalers to handle the contracts entered into at lower price and to accept new contracts at higher prices.
 (3) Automobiles : The automobile dealers, a vital link between the manufacturer and the customer, have agreements with manufacturers for the sale of cars, scooters, commercial vehicles etc. The success of a franchised automobile dealer is tied up with the growth of automobile industry.
The profit margin allowed to an automobile dealer currently ranges from 2 per cent to 5 per cent as compared to 20 to 50 per cent in the case . of cars and commercial vehicles which existed prior to April 1955.
The demand recession which hit the car and jeep sectors in 1973, subsequently affected the commercial vehicles sector also and has now affected the scooter industry also. Many of the existing dealers have started diversifying their trade activities by entering into allied lines like running petrol pumps and body building and even non-allied lines like trading in refrigerators, T.V., air-conditioners, etc.
In 1973 the distribution and sale of cars and scooters were subject to the control of the Union Government. There was, however no such control on commercial vehicles. However, a franchise dealer was allotted a specific area for distribution of commercial vehicles and was allowed to appoint a sub-dealer with the approval of the manufacturer in any specific area included in his territory.
(4)Pipes and Fittings : The trade in pipes and fittings is mostly concentrated in Nagdevi street area which is also known for quality engineering products. Some of the merchants are manufacturer-cum-traders, while some are only stockists and distributors of the products of certain specific companies and some are only importers and exporters of pipes and fittings.
The first World War proved a blessing in disguise to the pipes and fittings merchants due to rising demand. The trading opportunities were fully utilized by the pipes and fittings merchants and even indentors who had been previously indenting on behalf of merchants were tempted to undertake direct imports on their own. This resulted in a glut of pipes and fittings and the traders and merchants were faced with a new problem. The depressed conditions continued for a long period even after the First World War and it was necessary for the merchants and traders to think of ways and means in meeting the situation. Within a few years after the outbreak of Second World War severe shortage of pipes and fittings in the market developed on account of short supply in imports, particularly from the United Kingdom which was prominently involved in war operations. Towards the end of 1942, the trading in pipes and fittings was controlled by the Government. As a result the merchants were not allowed to sell the controlled commodities directly to the consumers, and on the contrary they had to submit a list of stocks held to the authorities. They had to release the material only against the release orders received by the Government. Since 1942 no direct imports by merchants were permitted and the imports of pipes and fittings dealt by the Government were allowed to be handled by a private firm. In 1947 the Bombay Registered Pipe Dealers' Syndicate Private Limited was formed, consisting of quota holders and non-quota holders. The syndicate was the only distributing agency of pipes and fittings upto 1953, when the control order was lifted. Since 1953 imports were liberalised and merchants were permitted to import pipes on their own, but as the foreign exchange position became critical, the import quota of pipes was again restricted. Since 1957, the import quota of pipes was further reduced by about 20 per cent. The shortage of the materials caused the prices to rise considerably.
As there were only two companies dominating the Indian market, one of these adopted a sales policy according to which special discounts were allowed to bulk buyers. Subsequently a number of units came into production and owing to competition amongst the manufacturers the scheme of special discount was discontinued.
(5)Cereals, Pulses and Oilseeds : Bombay has a well-organised market in pulses and oilseeds at Dana Bunder near Masjid Road Station where godowns of Bombay Port Trust are situated. As per 1971 Census, 845 persons were engaged in wholesale trade of cereals and pulses in Greater Bombay and 1545 in the wholesale trade of food stuffs other than cereals and pulses.
The traders buy goods from various upcountry producing centres, bring those goods and sell them in the market and charge prescribed rate of commission. They also receive goods from their upcountry agents for sale on commission basis. The annual turnover of a wholesale trader of   cereals  and pulses  is approximately two million bags which is worth about twenty crores of rupees. The rate of brokerage varies from half per cent to one per cent and the rate of commission on the sale of goods ranges from 1 to 2 per cent.
The average annual arrivals of groundnut and groundnut oil in the market are about 3 lakh tons and 1 lakh tons, respectively.
(6)Electrical Goods : The trade in electrical goods was confined to very limited articles. But with the passage of time various new types of electrical goods used for domestic as also industrial purposes are coming in vogue. Majority of electrical shops are situated in Lohar Chawl area. As per 1971 Census, 685 persons were engaged in the wholesale trade of electrical machinery and equipments.
These wholesalers deal in cables and wires, cable joining material, wiring accessories, conduit pipes, all types of domestic appliances, fans and radios and industrial equipments, insulating materials and enamelled winding wires, lighting equipments, switchgears, motor control gears, etc.
The annual average turnover of a dealer varies from Rs. 5 lakhs to 10 lakhs.
The dealers have formed associations to solve their problems.
(7) Timber : About 500 timber wholesale merchants are found selling timber in Greater Bombay. The group includes importers of various species of timber from other States in India and supply them to different industries and Government departments against contracts. Besides, there are traders who undertake timber business on purely commission basis, rates of commission varying from 5 to 7 1/2 per cent. Timber contractors and saw-millers outside Bombay consign the timber to these commission agents who sell them in Bombay. This practice is mostly prevalent at Darukhana Lakdi Bunder where the goods arrive by country crafts and at Byculla Goods Depot and Wadi Bunder where the goods arrive by rail.

Junglewood is consigned to Bombay from various places in South India such as Mangalore, Calicut, Ernakulam, etc; teak fromNagpur and Chandrapur in Maharashtra State and Jabalpur in Madhya Pradesh; and fir and chir from Pathankot in Punjab State and from Assam.

About two lakh tons of junglewood logs and sawn sizes worth Rs. seven crores; about 40,000 tons of teakwood logs and sawn sizes worth Rs. 4 crores and about 25,000 tons of fir and chir sleepers and logs valued at Rs. one and a half crores arrive in Bombay every year for sale.

Maharashtra State Co-operative Marketing Federation : The Maha­rashtra State Co-operative Marketing Federation was registered in 1958 as a State-sponsored and State-participated apex organization for marketing co-operatives in the then bilingual Bombay State with its head office at Bombay. The federation howefer started its functioning in 1959 with the Board of Directors nominated by the State Government. The federation is mainly entrusted with the objectives to create an institu­tional agency for marketing agricultural produce, to supply farm requisites to farmers, to co-ordinate the working of affiliated marketing agencies; to provide market intelligence and guidance etc. All these objectives are set to bring about improvements in farming techniques, to boost agricultural production and strengthen and develop co-operative marketing in the State.

The paid-up capital of the Federation as on 30th June 1973 amounted to Rs. 155.25 lakhs. The details of the financial position of the Federation in 1970 and 1975 are given below:—

(Rs. in lakhs)


Particulars

1970

1975

Share Capital (including Government contribution).

1,14.00

6,49.00

Reserve and other funds

64.00

2,26.00

Bank loan

14,36.00

7,10.00

Working capital

17,23.00

15,85.00

Gross profit

96.00

....

Net profit 

30.00

....

Net loss    

 

114.00

Total—turnover  

34,63.00

32,84.00

The Board of Directors which governs the administration and func­tioning of the federation consists of 32 representatives representing taluka and district co-operative marketing societies, central co-operative banks, co-operative sugar factories, apex co-operative bank, other State co-operatives, the Commissioner and Registrar of Co-operative Societies.

During 1974-75, there were 608 'A' class members; 213 'B' class members; and 123 associate members.

The trade activities handled by various departments of the federation are described below.

(1) Foodgrains : The Federation plays a major role in the purchase and distribution of foodgrains other than jowar, and rice. The State being a deficit State in foodgrains, it necessarily has to import foodgrains from other surplus States like Punjab, Uttar Pradesh, Madhya Pradesh, etc. Besides, during harvest season, the federation purchases cereals, pulses, oil-seeds etc, from the local markets and distributes these foodgrains to consumers through the channel of co-operative consumer societies at reasonabk prices. The Federation also undertakes the distribution of controlled commodities like sugar, wheat products to the nominees and retailers appointed by Government of Maharsahtra, mainly in Bombay. The sales of these commodities in the year 1973 were to the tune of Rs. 5.80 crores, of which levy sugar amounted to Rs. 5.17 lakhs (264,000 quintals) and wheat products of Rs. 63 lakhs (73,000 quintals). The Federation supplies agricultural produce to consumers' co-operatives at reasonable prices including those organised for industrial workesr. Similarly, the Federation also supplies agricultural produce to the jails in the entire State. During the year 1972-73, the total value of such supplies amounted to Rs. 1 crore, A number of consumers' co-operatives and industrial canteens buy foodgrains from the wholesale shop at Masjid Bunder maintained by the Federation for this purpose. During 1974-75, the Federation purchased 695 quintals of mung through the sale purchase societies and distributed the same to Mumbai Kamgar Sangh and Samarth Co-operative Society.
The Marketing Federation which has the agency of the Indian Oil Corporation, meets the demand for mineral oils required by processing units, growers, and their co-operatives. With a view to supply superior kerosene and light diesel oil from ready stocks, Federation has opened a depot at Wadala.
During 1971-72, 14,914 kilolitres of superior kerosene oil, 680 kilo­litres of crude oil and 98 kilolitres of mobile oil, was sold from this depot. In 1974-75, the sale of Wadala Depot increased to 46,185.50 kilolitres of superior kerosene oil valued at about Rs. 4 crores. The depot earned the gross profit of about Rs. 2 lakhs during 1973-74 and approximately Rs. 4 lakhs during 1974-75.
The Federation has also opened two shops, one each at Duncan Road and Byculla for the sale of vegetables and fruits on consignment basis, despatched by member societies. The goods handled in these shops include grapes, mangoes, papayas, brinjals, lady's fingers, bananas, potatoes. The vegetables and fruits are supplied regularly to institutions like Indian Institute of Technology, Powai; Beggar's Home; Jails, etc. During 1971-72, the Byculla branch supplied vegetables, and fruits of the value of Rs. 2,85,583 to 9 such institutions. During 1974-75, it supplied mangoes, sweet potatoes, tomatoes, etc., worth about Rs. 2 lakhs and suffered the loss of about Rs. 29 thousand. During 1974-75 the annual sales of the Byculla branch approximately amounted to Rs. 181 thousand and earned the gross profit of about Rs, 18 thousand.
The Duncan road branch in 1971-72 supplied onions and potatoes to various canteens and institutions worth about Rs. 117 thousand during the year 1971-72 and thereby received a commission of Rs. 6,400.
During 1974-75 the value of supplies increased to about Rs. 354 thousand and thereby earned the net profit of Rs. 8,201.05.
The total value of sales of the Duncan Road branch increased from about Rs. 24 thousand in 1973-74 to about Rs. 354 thousand in 1974-75 and thereby earned the gross profit of Rs. 4,226.53 in 1974-75.
The Federation also supplies pulses, etc. to the National Agricultural Co-operative Marketing Federation, During 1974-75 the value of pulses, gul, onion, etc., supplied to the National Agricultural Co-operative Marketing Federation amounted to Rs. 33.45 lakhs.

(2)Procurement of Foodgrains : The co-operative machinery of the Federation is being used for the procurement and distribution of food-grains. The monopoly procurement scheme for jowar was initiated in 1964-65 and that for paddy and rice in 1965-66. The Marketing Federation is working as an agent of Government in implementing the scheme. In case of jowar, the number of such purchasing centres rose from 87 in 1964-65 to 490 during 1972-73 and the number of sub-agents rose from 257 during 1964-65 to 308 during 1972-73 in Maharashtra. In case of paddy, the number of purchasing centres and number of sub-agents decreased from 710 in 1965-66 to 538 during 1972-73, and from 241 in 1965-66 to 153 in 1972-73, respectively in the State. The quantity of jowar thus purchased through all these centres during 1964-65 was 2,47,181 tonnes, worth Rs. 12.95 crores. During 1972-73, the total quantity of jowar purchased however decreased to 33,227 tonnes, valued at Rs.1.93 crores. The Federation purchased 1,12,618 tonnes of paddy, worth Rs. 5.97 crores during 1964-65. Like jowar the purchase of paddy also showed a decrease during 1972-73 as only 84,142 tonnes of paddy was procured during 1972-73 at a cost of Rs. 5.37 crores. The difference in value of paddy in 1964-65 and 1972-73 might be due to rise in prices.

(3) Fertilisers : Realising the difficulties of the co-operatives in catering to the needs of the agriculturists in the State, the apex marketing federation handles the distribution of fertilisers through co­operative societies. It has taken up the agencies of five companies of which two are in Bombay viz., the Fertiliser Corporation of India Limited, Trombay and Dharamsi Morarji Chemicals Co. Limited, Ambarnath. During 1971-72, the Federation purchased 12,302 tonnes of Urea and 10,068 tonnes of Suphala from the Fertiliser Corporation of India, Trombay.

Since 29th March 1972, Dharamsi Morarji Chemicals Company Limited, handed over the distribution of single superphosphate to the Federation. Since then the Federation is acting as the agent in distributing single superphosphate, and it distributed 2,848 metric tonnes of single superphosphate of Morarji Chemicals Company during 1972.

(4)Machinery : The Federation, among its multifarious activities, is also undertaking the distribution of agricultural machinery, particularly electric engines, oil pumps and Government tagai loans to farmers. The Federation has also taken up the agencies of almost all popular types of oil engines, electric motors and pumping sets for the entire State.

(5)Cotton : The Monopoly Cotton Procurement Scheme was started from 1st July 1972 in the State. Under the Maharashtra Raw Cotton (Procurement, Processing and Marketing) Act 1971, the Federation was appointed as a chief agent for procurement, processing and marketing of cotton in Maharashtra. The scheme was suspended in the cotton seasons of 1973-74 and 1977-78. However, it was extended upto 30th June 1986 subsequently, and was restarted from November 1986.

Top

FAIR PRICE SHOPS

The office of the Controller of Rationing regulates the distribution of commodities which are scarce in the market, through fair price shops.
The statutory rationing was introduced for the first time in the city of Bombay during the Second World War in 1943. In the beginning ration cards were issued, and the area of operation was restricted only to the then Bombay city. In 1954, as a result of the improved overall situation of foodgrains, the statutory rationing was discontinued. Since November 1957, due to conditions akin to scarcity in the State Government introduced foodgrains distribution system in Greater Bombay. This system was not executed under any statutory orders, but only on the basis of agreements executed between the fair price shopkeepers and the Government.
There were 17 zonal offices in Greater Bombay for the execution of the foodgrains distribution system and the area of operation was extended up to Borivli on western side and Mulund on eastern side. In this distribu­tion system, family ration cards were introduced in Greater Bombay and the foodgrains were distributed according to fixed quantum and fixed price to the cardholders, who were the heads of the families. Even though, the availability of foodgrains on cards was ensured, the foodgrains were also available in open market for the consumers in Bombay. This system had a good impact on controlling the prices of foodgrains in open market.
Again after the failure of monsoons which resulted in the shortage of foodgrains, Government introduced statutory rationing in Greater Bombay from April 1966, under the Maharashtra Foodgrains Rationing Order, 1966. Initially, the foodgrains like rice, wheat, jowar, bajri, maize and millo were distributed as rationed commodities and they were also included in the initial statutory order.
At the beginning of 1974, after the acute shortage of kerosene, Government decided to distribute kerosene oil at fixed quantum and price to the cardholders on ration cards. This system was adopted from September 1974.
In 1977, as per the schedule of the Maharashtra Rationing (Second) Order, 1966, only rice and millo were the rationed commodities. However, for the convenience of the cardholders, wheat and jowar were also issued on cards.
Statutory rationing has been withdrawn recently, though the articles are distributed through the public distribution system.
There were in all 2076 authorised ration shops during 1977 in Greater Bombay. The category-wise information of these authorised ration shops is as follows:—

 

Category

No. of authorised
retail shops

(1)

Scheduled Castes, Scheduled Tribes and Other  Backward Class societies.

2

(2)

Other co-operative societies

451

(3)

Employees' shops

102

(4)

Freedom fighters

59

(5)

Ex-servicemen

1

(6)

Scheduled Castes and Scheduled Tribes persons

4

(7)

Other individuals

1454

(8)

Hotel associations and societies

3

 

Total   

2076

The quantity of foodgrains distributed through the authorised ration shops in Bombay during 1974, 1975 and 1976 was as follows:—
(Figures in metric tonnes)


Year

Rice

Wheat

Other Food grains

Total

1974

1,64,085

4,31,942

24,747

6,20,774

1975

1,14,700

5,37,572

9,690

6,61,962

1976

1,85,537

3,82,269

4,939

5,72,745

In 1977, the number of ration cardholders in Greater Bombay was 16,12,437; while the total number of units in these ration cards was 1,22,65,337. The general quantum fixed per adult i. e. 2 units varied according to the stock available with the Government. In 1977, the quantum of rice, wheat, jowar and sugar fixed per adult per fortnight was : rice 1 to 2 kg; wheat 5 kg; jowar 1 kg; and sugar 300 grams.
The profit margin allowed to be taken by the ration shopkeeper varies according to the commodity. In case of rice and sugar, the profit margin permissible is fixed at Rs. 5 per quintal and in case of wheat, bajra, and jowar, it is fixed at Rs. 4 per quintal.

Top

RETAIL TRADE

Even for a long period after the possession of the island by the East India Company, the local trade was comparatively small. The factors responsible for its slow .growth were lack of adequate capital, external warfare, epidemic diseases and the absence of trading class. The Com­pany's Government then appointed persons called Kacharas to trade in rice and grain. However, these persons were supposed to sell small quantities of grain in public market. In 1741, the Bombay Government appointed a clerk of the markets to undertake retail sale of grain.
Trade other than grain trade was free from Government interference in the middle of the 18th century, and encouragement was given to the fishermen, cultivaters to bring their produce in the market. During the first half of the 19th century, the local trade profited by the increase in the foreign trade which induced rich merchants, Parsi Hindu and Englishmen, to open agencies and shops.
Besides many persons engaged in banking, agency and brokerage, Bombay had in 1847, 201 dal and rice dealers, 152 confectioners, 491 cloth merchants, 203 dealers in brass and copper, 253 tobacconists and 439  pawn brokers.
In the context of the retail trade in Bombay, the Shops and Establish­ments Act of 1948 assumes importance which becomes evident from the fact that it roughly covers about one-half of the total firms and about one-third of the total employment in the city of Bombay.
The Bombay Shops and Establishments Act, 1939, was the first attempt by the Government of Bombay to regulate the conditions in this large but neglected field. Its administrative and substantive provisions were however found to be inadequate both from the point of view of content and coverage and a need for a more comprehensive measure was felt. The Act was therefore replaced by the more comprehensive Bombay Shops and Establishments Act, 1948, which came into force from January 1949. The Act divides the establishments into five categories, viz., shops; commercial establishments; residential hotels; restaurants and eating houses; theatres and other public amusement or entertainment.
Retail trade in Greater Bombay is carried on by numerous shops located in various wards of the city and suburbs. Their number and concentration depend on the bazar locality and the demand for the goods kept for sale. Many a time these shops keep a variety of goods for the convenience of their customers and thus secure handsome business. Their stock-in trade is usually limited but is rapidly replaced when sold out. Retailers usually purchase from wholesalers.
Of the total number of firms in Greater Bombay, the shops in retail trade constitute the major percentage i.e. about 45 to 50 per cent. The retail trade firms can be divided into following major categories: cereals and pulses, vegetables and fruits, eggs and poultry, cooked food, dairy  products, tobacconists and pan-bidi shops, other food articles, fuel, textiles, wearing apparel and made up textile goods, precious stones and jewellery, chemists, metal utensils and glassware, building material, electrical goods, etc.
Most of the shops which cater to the daily needs are scattered over all the localities of all the wards in Greater Bombay. But there are many bazars specializing in a particular type of commodity. The following statement reveals the number of retail trade establishments in Greater Bombay as per the 1971 Census:—


Category

No. of establishments

Persons employed

(1)

Retail trade in food and food articles beverages, tobacco and intoxicants.

33,527

70,500

(2)

Retail trade in textiles

5,578

18,742

(3)

Retail trade in fuel and other house­hold utilities and durables.

10,962

28,077

(4)

Retail trade in others

11,847

33,541

District Total

61,914

1,50,860

About one-fourth of the total retail establishments in Greater Bombay are located in Ward ‘ C' which covers the areas of Khara Talao, Kum-bharwada, Bhuleshwar Market (area around the Mulji Jetha and Mangaldas markets), Dhobi Talao and Fanaswadi; about 13 per cent establishments are located in Ward ' B' covering the areas of Mandvi, Chakala, Umarkhadi and Dongri; about 12 per cent establishments in Ward 'A' covering the areas of Upper Colaba, Middle and Lower Colaba, Fort (South), Fort (North) and Esplanade; about 11 per cent in Ward ' G' covering the areas of Dadar, Mahim, Prabhadevi, Worli, Chinch-pokli and Love-grove; about 10 per cent in Ward ‘ D ' covering the areas of Khetwadi, Girgaum, Chowpatty, Walkeshwar and Mahalaxmi; about 9 per cent in Ward ' E' covering the areas of Tardeo, Mazagaon, Tadwadi, Nagpada, Kamathipura and Byculla; and about 8 per cent in Ward ‘ F ' covering the areas of Parel, Sewri, Naigaum, Matunga and Sion. The suburban area constitutes about 12 per cent of the total shops and establishments in Greater Bombay. During 1975, there were as many as 1,06,334 shops and 46,602 commercial establishments registered under the Shops and Establishments Act, 1948, in Greater Bombay.
Some of the important municipal (The details of retail municipal markets are given under ' Municipal Markets) retail markets in Bombay are described below:
Colaba Market: This is a composite retail market situated at Lala Nigam Road, Colaba. This was started in 1895 and covered an area of 917 sq. yards. The market is particularly convenient to the fishermen working in Sassoon Dock area. The market consists of 45 stalls and is well-patronized and overcrowded.
Fort Market: This is strictly a retail market situated at Mint Road. It was remodelled in 1939 and extended over an area of 1905 sq. yards. As the market area was found to be inadequate during peak hours, the adjoining area of 1955 sq. yards was reserved for the extension of this market under the Development Plan prepared in 1964. The market is equipped with 46 mutton stalls and 108 vegetable stalls.
Dongri Municipal Market: The market established in 1954 is situated near Sandhurst Road railway station. This is a composite retail market and covers an area of 2593 square yards.
Erskine Road Municipal Market: The market popularly known as Null Bazar market is one of the oldest municipal markets in the city opened in 1837 for the sale of fruits and vegetables. The present building was built in 1867.
The market is situated between Sardar Vallabhbhai Patel Road and Erskine Road and is now a full-fledged composite retail market dealing in vegetables, fruits, flowers, mutton, fish, poultry and eggs. The market is considered to be the second important market in the city and covers an area of 5494 sq. yards. Fruit and vegetable vendors have formed a street market on Erskine Road. A small piece of land admeasuring 304 sq. yards was earmarked for the extension of the market.
Bhuleshwar Municipal Market: This is an old market constructed in the year 1897 and is situated at the corner of Bhuleshwar Road and 1st Bhoiwada Lane. It occupies an area of about 1419 sq. yards. The market is equipped with 189 vegetable stalls, 13 outside shops and 16 spaces. In the development plan it was proposed to start an open market to relieve  the  congestion  in  the market.
Chowpatty Municipal Market: This is a composite municipal retail market constructed in the year 1927 off Babulnath Road to serve Chow­patty, Walkeshwar and Malabar Hill area. The market covers an area of about 4164 sq. yards. The building of the market is constructed on modern lines and serves the rapidly developing areas of Malabar Hill and Walkeshwar.
Mahatma Gandhi Market: The market was constructed in about 1960 at King's Circle near the King's Circle railway station. It is on a plot  admeasuring 3648 sq. yards. Two cloth markets have been accommodated in the front portion of the building while in the rear portion, vegetables, mutton, fowls, eggs and fish sections are situated. The total stallage capacity of the market is about 250. The market consists of 171 cloth shops, 14 outside shops, 50 vegetable stalls, 6 mutton stalls, one ice stall, one fowls and eggs stall. Besides, the market is also equipped with a department store, a canteen and a store.
The shopkeepers trading in cloth sell ready made garments, sarees etc.
Pork Market, Marine Lines: This is an old municipal market situated on Cowasji Hormasji street with an area of about 122 sq. yards. Prior to the establishment of Arthur Road Slaughter House in 1915, pig slaughtering was also undertaken in this market. The market has only three stalls. For its expansion, the adjoining area admeasuring about 660 sq. yards was reserved in the Development Plan of the Municipal Corporation.
Worli Municipal Market: This composite retail market was established in 1942 to cater to the needs of the newly developed localities in the vicinity of Worli Hill, Worli Sea-face, and along Dr. Annie Besant Road.
Andheri Market : This is a composite retail market with an arrange­ment for local wholesale business. It is situated on Swami Vivekanand Road, a furlong away from Andheri railway station. The area admeasures about 7250 sq. yards and is occupied by several structures. The main structure is utilized as vegetable market. An open space admeasuring approximately 60' x 60' at south-west corner is kept for wholesale business in vegetables. The fish squatters are provided platforms in an open shed in the rear, behind which is a mutton section is housed in a masonry structure. Under the Development Plan, the adjoining area admeasuring about 2 acres is reserved for the expansion of this market.
Consumer Co-operative Societies: A co-operative enterprise is one which belongs to the people who use its services, the control of which rests equally with all the members and the gains of which are distributed to the members in proportion to the use they make of its services, A consumer co-operative society associates consumers on this basis for the supply of some of the goods and services necessary to satisfy their needs.
During the Second World War, India like other countries, naturally faced an acute shortage of food, and for the first time in the nation's annals, food had to be distributed on the rationed basis. Tendency towards hoarding and blackmarketing had reached its climax. It was at this critical time that some social workers felt it necessary to organise formation of several co-operative societies. This helped to certain extent in overcoming the difficulties experienced during the war time.
Mumbai Kamgar Madhyavarti Grahak Sahakari Mandal Ltd.: The Mandal decided to form and organise a consumers' co-operative society. Accordingly, Mumbai Kamgar Central Consumers Co-operative Society was started in the year 1948 with a working capital of over 5,000 rupees and 77 members on its roll. The special feature of this society was that the workers in the textile mills took a leading part in collecting working capital of the society.
Soon after Independence, in view of the increase in agricultural produc­tion, controls were lifted, as a result of which a number of co-operatives suffered losses, Some of the societies which had suffered a loss were taken over by the Mumbai Kamgar Society, and slowly the activities of the society extended all over Bombay. The society after its working of 15 years was selected as a central wholesale society by the Government and all primary societies from the central part of Bombay were affiliated to the society and it came to be known as the Mumbai Kamgar Central Wholesale Consumers' Co-operative Society.
In March 1968, the society started a departmental store known as Apna Bazar situated at Naigaum. In March 1969, another departmental store (although of small size) was started in Fort area. The membership of the society during 1975-76 stood at 8699, of which 8664 were individuals, 34 primary societies and Government. The list of activities of the Mumbai Kamgar Society in 1975 comprised 2 departmental stores (Apna Bazar ( Recently three more departmental stores have  been  established   at   Mulund, Matunga and Andheri)), 2 medical stores, 20 grocery and provision shops, 46 primary societies affiliated to the society, 1 spices factory at Taloja-Panvel, 1 wholesale section and 1 dairy at Chalisgaon. The society sells about 3500 litres of milk every day brought from Chalisgaon Dairy. The society also under­takes seasonal sales of various kinds such as grapes, mangoes, pineapples, umbrellas, crackers, woollen blankets, etc. The society has also recently undertaken the work of distribution of text books published by the Maharashtra State Text Book Bureau.
The total turnover of business of the society during 1975-76 was Rs. 11.5 crores which included wholesale as well as retail trade and supply of the material to canteens in factories.
Apna BazarDepartmental Stores : The main departmental stoie of the society is situated at Naigaum in Central Bombay. Apna Bazar at Naigaum was started in 1968 whereas at Fort was started in 1969. The store at Naigaum has twenty-four sections which include grocery, leather products, medicines and various articles ranging from textiles to T.V. sets.
The building of the Apna Bazar at Naigaum is owned by the society and the total cost of the premises is about Rs. 14 lakhs. The departmental store at Naigaum also runs a health centre where doctors and specialists in different spheres of medical science offer their services at nominal charges. The optical section of the departmental store offers free eye examination. Besides, it also organises exhibitions and documentaries for the benefit of the consumer.
The details of turnover of the two departmental stores viz., Apna Bazar at Naigaum and Fort are given below:—

(Rs. in lakhs)


Name

Total Sales

1973-74

1974-75