Reserve Bank of India. Report of the Seventh Annual General Meeting of Shareholders

In the main the essential problem of war economy continued to be the same as in the war of 1914-18 namely the necessity for the mobilisation of all economic resources for the prosecution of war at a time when the real output of goods and services was reduced by the diversion of men to the forces. [...] An important development in the exchange market was the recovery of the quotation for free sterling in the New York market as a result mainly of the payment agrements entered into by the Bank of England with the principal banks in the United States and other countries in the course of the year. [...] Raw jute showed a generally downward tendency during the greater part of the year but the decision of the Bengal Government to restrict the acreage in 1941 to one-third of that in 1940 the agreement between the Government and the industry to make purchases at fixed rates and the receipt of large orders from the British Government had a steadying effect during the last four months and the index nu [...] The lower level of advances and bills of the scheduled banks as compared( 24 ) with the previous year reflected partly the slackening of trade demand due to the loss of important European markets and partly the desire of the banks to keep their position liquid on account of the uncertainties of the war. [...] In the interest of the depositors and of sound banking in general it was thought necessary to remove this defect and a bill was introduced by the Government of India in the Central Legislative Assembly on the 5th November 1940 and was passed by the Assembly on the 8th November 1940 receiving the assent of the Governor-General on the 27th November.