The Insurance & Finance Review. October 1930

The question of the maintenance of reserves is in the opinion of the Committee inseparably bound up with the problem of establishing a Central Reserve Bank with which the bulk of the reserves of the ordinary banks should be deposited to avoid multiplicity aid dissipation of reserves. [...] The American example may serve the purpose of an object lesson to India as in the money market of this country the lack of cohesion among the various constituents is even more pronounced than what it was in the United States on the eve of the passing of the Federal Reserve Act. [...] The Committee of the Chamber are most emphatic in their opinion that unless the administrative measures of the Finance Department of the Government of India involving very large amounts be properly regulated in accordance with the interests of the money-market no legislation will prove itself so resourceful as to raise it to the status of the organised money-markets of other advanced countries. [...] The movements of the rate of this Bank have practically no reference to the requirements of trade and industry and it may be seriously contended that the Bank rate in India is rather too intimately connected with the loan operations and the exchange policy of the Government. [...] The Committee of the Chamber are emphatically of opinion that the resources of the Indian money-market should be strengthened by transferring these Reserves to India and the huge amount of gold now being used to augment the resources of the London market should be made available to the Indian industries the development of her agriculture and the fostering of her trade and commerce.