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well as to the circumstances mentioned in the preceding
paragraph.
Generally speaking I think we should agree with
the view that sound banking cannot be promoted by legislative restrictions alone, and further that a multiplicity of regulations may hamper the useful development of the
banking system. All observers are agreed, however, that in the circumstances of India (where with no important exceptions only the ordinary provisions of Company Law apply to banks) the case for some special legislative control is fully made out. It is unlikely that a different conclusion could be reached in regard to Palestine, where, moreover, in the absence of a Central Bank such as India is in process of acquiring, it may well be necessary that Government should play an even greater part.
As regards minimum paid-up capital, the figure
proposed in Palestine is over six times as great as that
which has been suggested for India.
Clearly this is a
matter where local conditions must count for much, and it
is also a form of control which Indian experience suggests
is of doubtful effectiveness. In this connexion we should
certainly advocate careful consideration of some scale,
based on extent of business, rather than a universal
minimum.
We would also suggest that it is, perhaps, even
more important to prescribe a minimum relationship between
paid-up,,subscribed and authorised capital. The abuse
of a large authorised capital has been frequent in India, and
the proposal which at present holds the field is that
authorised should not be more than twice subscribed and
paid up not less than half subscribed. This might be
more effective than the mere mention of each of the figures
as suggested in the Report.
It