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