CO129-555-6 Banking crisis 24-9-1935 - 18-10-1935 — Page 72

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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