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Mr. Waley's supposition that we have dealt with
the problem of mushroom banks in India is, unfortunately,
true only in the sense that for many years India has
suffered from these and other unsound banking growths.
Taking joint-stock banks alone, of which 171 were known to
exist in 1932, there were 162 failures in the decade
1923-1932, and 285 failures in the twenty years 1913-1932. The greater part of them had very small paid-up capital (some had none!) and had been in existence for a very few
years. The figures give no encouragement to the view that matters are improving.
In
The plain fact is, indeed, that no Government
action has yet been taken which would lead to an improvement.
For over twenty years enquiries and discussions have taken
place, a mass of useful material has been accumulated, and
an immense number of suggestions has been sifted.
particular there was a very comprehensive enquiry into the
whole banking system in 1931. But for various reasons, the
latest of which is that the establishment of the Reserve
Bank renders other action premature, nothing effective has
been done and no policy has been formulated.
In these circumstances we cannot make any sugges-
tions based upon experience of remedial measures. On the
other hand it may, perhaps, be useful to consider what is
now proposed in Palestine in the light of suggestions
hitherto made in India. The symptoms, judging by the
Report, are precisely those with which India has long been
familiar. of course it does not follow that the same
remedies would be effective, for conditions in the two
countries are doubtless different in material particulars.
The following observations must, therefore, be read with
due regard to our ignorance of conditions in Palestineas
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well