Tuesday, June 23, 2009

indian salem banknote,madras presidency

We all know what a bank does. It accepts our deposits, makes loans and carries out other financial activities. But is that what the mission of a bank should be? Or should a bank step outside of its traditional roles and focus on the social needs of its members? These are questions that the founders of the Salem District Urban Bank Limited asked themselves. And in 1904, during the British occupation of India, a small group of Madras Presidency locals came up with a unique approach to banking - do what is right for the people they serve.

So with this backdrop, Sir P. Rajagopalachari, the first Registrar of Madras Central Bank, became the key figure driving the establishment of the Salem District Urban Bank in Tamil Nadu, India. As India's first cooperative bank, its initial focus was to help the poor by promoting savings but as we will discover later, it also had bigger ideas. The Salem Bank was inaugurated on 6 January 1904 with 16 members and a share capital of 1,000,000 Rupees and was presided over by the Government of India.

A novel approach was used by printing an initial quantity of 10,000 One Rupee "banknotes" and distributing them free to local patrons along with a savings box, similar to the Kiddy Bank scheme (helping kids save), as a way to encourage all poor people to start saving.

The 1 Rupee note was issued as a local currency receipt for the purpose of helping poor people in the district of Salem. Not intended to be a true circulating currency note, it could be redeemed 24 hours after presenting it to the Bank. As might be expected, this 1 Rupee became very popular and within a few months of issue a curious thing happened - it began passing from one person to another as happens with normal circulating currency.