^75 



Well as of a high rate of interest on the money laid out by 

 them in trade. The objection, however, that the grant of 

 special privileges declaring that the claims of the banks 

 protected by Government shall have preference over all other 

 claims is likely to render the terms on which the sowkars 

 would be willing to lend money to such of the poorer ryots 

 as could not obtain loans from the banks harder than before, 

 is quite valid. And, accordingly, when, in 1884, a proposal 

 was made by an association designated the Land Mortgage 

 and Commercial Association, Cuddalore, to establish a bank 

 on the condition that privileges similar to those above re- 

 ferred to were to be granted, the Government very properly 

 declined to comply with the request on the ground that the 

 grant of such privileges to a particular bank was likely to 

 render the terms obtainable from ordinary bankers and mer- 

 chants harder than ever, by rendering the security offered 

 of uncertain value. It would, however, be quite possible 

 to establish agricultural banks which could be successfully 

 worked, even though no special privileges of the kind were 

 granted. 



96. Agricultural banks, which are likely to be successful 



The nature and consti- ^^ t^^is couutry, are land credit institu- 



tution of the proposed tious like the Swiss Land Credit Banks, 



Agricultaral Banks. ^ dcSCriptioU of which is givCU in the 



paper printed as appendix VI. -C. (9). The management and 

 control of these banks should be vested in a directorate com- 

 posed partly of Government officials and partly of non-official 

 persons. The two essential conditions for success are, first, 

 the"provision of securities for the stability of the institutions 

 and for good faith in their management and command of the 

 requisite capital on easy terms ; and, secondly, fairly accurate 

 knowledge of the solvency and other circumstances of the 

 applicants for loans and of the adequacy of the security 

 ofi^ered to admit of applications being complied with the 

 utmost promptitude. Official supervision and the use of 

 Government credit are necessary to secure the first, and the 

 association of non-official agency possessed of local knowledge 

 with official agency in the transaction of business is necessary 

 to secure the second of these conditions. The arrangements 

 may, after the model of the constitution of the Swiss Land 

 Credit Banks above referred to, be somewhat as follows : 

 A bank might be established at a taluk station, Karur for 

 instance, where, as we have already seen, several firms ©£' 

 Nattukottai Chetties lend money at exorbitant rate& of 

 interest to ryots. The capital required might be subscribed; 

 in shares of, say, Rs. 50 each, the Government^ undertaking; 



