The Government has also acted wisely in establishing savings banks in India, and although the aggregate of the deposits at present received is not large, there is little doubt that in course of time the advantages which these banks offer will be more fully appreciated. At the beginning of 1876 the number of depositors had increased to 74,000, and the total of deposits amounted to about £1,900,000.

We have referred to the financial policy of the Government because that policy materially affects the operations and consequently the interests of the Anglo-Indian banks. As we shall explain further on, the banks depend to a great extent upon the Government for the means of remitting their funds to the East, while the Government has to rely upon the banks for the means of meeting their home expenditure; and in many other ways the operations of the banks are associated with the action of the Government.

Of the seven banks engaged in the Eastern Exchange business, three of them, viz.

The Oriental Bank Corporation, The Chartered Mercantile Bank of India, London, and China, The Chartered Bank of India, Australia, and China, are incorporated under Royal Charter, and the liability of the shareholders is limited to twice the amount of the shares.

The Hong Kong and Shanghai Banking Corporation was incorporated in July, 1869, by special ordinance of the Legislative Council of Hong Kong, which was subsequently confirmed by the English Government. The remaining three, viz. The Agra Bank,

The National Bank of India, and » The Delhi and London Bank, are registered under the Companies' Act of 1862, which, it is scarely necessary to add, limits the liability of the shareholders to the nominal amount of the shares.

It will be seen from the following statement, compiled from the latest published balance sheets, that the aggregate capital and reserves of the above banks amount to £6,675,000, while their deposits exceed £23,000,000. The total resources of the seven banks, including undivided profits, and the sums raised by the sale of bills of exchange drawn on their various establishments and agencies, amount to no less a sum than £52,000,000.*

* We may here mention that some of the hanks, viz. The Oriental Bank Corporation, the Chartered Bank of India, Australia and China, and the Agra Bank, Limited, issue only yearly statements to 31st December, while the others publish in addition half-yearly statements to 30th June. As in the latter instances, however, the statements are merely ad interim ones, and the bulk of the profits are left over to he dealt with at the close of each year, we have deemed it advisable, for the purposes of more correct comparison, to take the last issued yearly balance sheets of the seven banks, which are made up to 31st December, 1875.

22

Statement A. Showing the Liabilities and Assets of the Anglo-Indian-China Banks at 31st December, 1875.

* Converted into sterling at the exchange of 4/6 per dollar.

With regard to the deposits it is difficult to estimate what proportion is derived from India, several of the banks having branches and agencies in Australia as well as in China, Japan, and other places, nearly all of which receive deposits and allow interest thereon. It is known, however, that the deposits received at the London offices and at some of the agencies in Scotland of the various banks are very-large, and form no inconsiderable portion of the total amount. This branch of the business has been much encouraged and developed by the favorable rates of interest allowed by the banks for moneys placed* in their hands for fixed periods of one or two years. Formerly as much as 6 per cent. per annum was allowed on such deposits, but recently, owing to the lower value of money ruling both in London and India, it was found necessary to make a reduction in the rate, and the maximum is now 5 per cent., while one or two banks do not allow more than 4 per cent. In India also similar reductions have been made from time to time in the rates for fixed deposits, it being found difficult, if not impossible, in some years to employ to advantage money borrowed on high terms.

The annexed statement, comparing the present financial position of the six principal banks as a whole with what it was seven years ago, shows that while the increase in the paid-up capital has been at the rate of 22 per cent., the deposits have increased 25 per cent. As compared with the progress shown by some of our London banks, it must be confessed that this result is not very encouraging, but as we have already explained, this particular branch of banking in India is greatly hampered by the general unwillingness of the native to trust his money to the care of Europeans, and consequently it is not a matter for surprise that the deposits of the Anglo-Indian banks show such a moderate increase. The recent reduction in the rates of interest allowed may also to some extent have contributed to this result.

Statement B.

Showing the Changes in the aggregate Liabilities and Assets of the six principal Anglo-Indian-China Banks at 31st December, 1875, as compared with the same as they stood at 31st December, 1868.

It will be observed that the item 'notes issued' appears in the balance sheets of some of the banks. These are chiefly issued in China, the exchange banks not being authorized to issue notes in India, the Government reserving to itself and the Presidency banks the exclusive right to this privilege. On the 31st December, 1.875, the note issues of the following banks were:

Subjoined is the average note circulation of the undermentioned banks during the month of December, 1875:

We do not propose to do more than take a passing glance here at the Presidency banks, viz. the Bank of Bengal, the Bank of Madras, and the Bank of Bombay, as they confine themselves to local business, and are not usually included in the term Anglo-Indian banks, which is understood to refer to those banks which transact exchange business with the East, and have establishments in London.