THE ECONOMIC WEEKLY November 17, 1956

Golden Jubilee

Glorious Record of the Canara Bank 1906 — 1956

IT is I n d i a n b a n k i n g ins t i tu t ions l i k e the Canara B a n k w h i c h have

enlarged the i r service and opened out branches, w i t h o u t order or direc­t ive and w i t h o u t any subsidy o r a r t i ­f icial support . A g a i n , i t i s I n d i a n banks w h i c h are shareholder-owned public ins t i tu t ions , as d i s t inc t f r o m State ventures, w h i c h have been ren­der ing this useful service to the coun t ry quie t ly and w i t h o u t any d rum-bea t ing o r fanfare . I t Is, therefore, hear t - rending to f ind t h a t there is no recogni t ion of a l l the good w o r k t h a t has been done or is being done by these ins t i tu t ions , so v i t a l f o r our economy. '

— S h r i C H Bhabha, Pres ident I n d i a n B a n k s ' Associat ion, speech at the Golden Jubilee of the Canara Bank, held at Bangalore .

A Ch i ld of the Swadeshi Movement The h i s to ry of the Canara B a n k

is a record of steady and systematic progress of an i n s t i t u t i on f r o m a modest beg inning in to the h i g h posi­tion it has gained as one of the leading scheduled banks . The na t ion­al consciousness t h a t was awakened at the beg inn ing of th is century after the p a r t i t i o n of Bengal , a n d the Swadeshi movement w h i c h fo l lowed, s t i r red a band of pa t r io ts headed by Shr i A Subba Rao Pai to under take many na t ion -bu i ld ing act iv i t ies fo r the benefit of the people in the i r area, s im i l a r to those under taken by pa t r io t s in the Punjab, Maha ra sh ­t ra , Bengal and other par t s of Ind ia . The Canara H i g h School and the Canara Gi r l s ' E l emen ta ry School founded at Manga lo re were the first of a series of in s t i tu t ions s ta r ted by them. The Canara Hindu Permanent Fund

Limited At the same t ime, the need to i m ­

prove the economic condi t ion of the people was also a g i t a t i n g the i r minds . Th i s could be done, they r i g h t l y fe l t , b y s t a r t i n g a n i n s t i t u ­t i o n to foster the h a b i t o f t h r i f t a n d promote s a v i n g a n d w o u l d extend financial assistance to businessmen to r u n a n d improve the i r business. T h i s became a b u r n i n g desire and led t h e m to s tudy ca re fu l ly the w o r k ­i n g o f " "Nidh i s " o f M a d u r a and other towns o f the South a n d to s t a r t on th i s mode l "The Cana ra H i n d u Pa r -manent F u n d l i m i t e d . " The F u n d

was ins t i tu ted on the f i rs t of J u l y in 1906 at Mangalore , in a ren ted b u i l d ­ing , w i t h a capi ta l of 2,000 shares of Rs 50 each. Shr i A Subba Rao Pa i was so enthusiastic about th is F u n d t h a t he went a l l a round, in hackney coach and bul lock c a r t explained the benefits of the F u n d to the common people and collected shares f r o m people of a l l w a l k s of l i fe . In fact , th is was one of the f i rs t j o in t - s tock enterprises in South K a n a r a .

The First Board of Directors The f i r s t B o a r d of Di rec tors con­

sisted of 24 Directors chosen no t on ly f r o m the different parts of South K a n a r a but also f r o m the Shimoga D i s t r i c t of Mysore. The combina t ion of people f r o m such d i s tan t par t s or the count ry at a t ime when communi ­cations were undeveloped showed the fe rvour and devotion as w e l l as the pioneering sp i r i t of the founders.

Credi t faci l i t ies in those days at Mangalore , a por t of considerable importance to Coorg and Mysore, were meagre; merchants had to bor­r o w at very h i g h rates of interest f r o m indiv iduals , and no indigenous bank existed to give faci l i t ies to the common people for saving or fo r f inancing their businesses. The Fund , however, w o r k e d more for the ser­vice of the people t h a n for g a i n i n g profits . I t was so solicitous of the welfare of i t s clientele t ha t i t had incorpora ted in its articles of asso­c ia t ion a provis ion t h a t a rate not exceeding 10% was to be charged for advances when higher rates were quite common. On account of i ts enl ightened policy and because the persons at the helm were educated, pa t r i o t i c a n d devoted to service, the F u n d qu i ck ly won the hearts of the people, a n d gained the fullest confi­dence of i t s constituents. The pro­ceedings of the Directors of those days show h o w v i g i l a n t and cautious they were, how minu te ly they looked in to the affa i rs of the F u n d to a v o i d a n y poss ib i l i ty of losses and h o w they strengthened the i n s t i t u t i o n rupee by rupee.

Hastening Slowly They i n i t i a t e d a pol icy of consolid­

a t i on before progress. Th i s has a l l a l o n g been fo l lowed a n d s t r i c t l y ad­hered to by the management in suc­ceeding years. Indeed, this has been the mos t r emarkab le fea ture of the h i s t o r y o f the B a n k .

There has been n o t h i n g more spectacular in the h i s to ry of the B a n k than the resourceful manner in w h i c h in the course of its n a t u r a l g r o w t h to ma tu r i t y i t has adapted i t se l f to the changing times, and played i ts f u l l par t in the bui ld ing up of the econo­mic s trength of the people in an ever-widening area. Even the com-position of the Board of Directors had been a m i r r o r of the l i fe around. I t consisted of leading lawyers, eminent re t i red Government .servants and talented businessmen. This harmonious blending of the different view points proved to be a great as-set to the B a n k and ensured its s t ab i l i ty and steady progress.

The premature demise of S h r i A Subba Rao Pai w i t h i n three years of the s t a r t i n g of the F u n d was a great b low; however the men at the helm realized tha t the .strengthening and developing of a l l the Ins t i tu t ions in the founding of w h i c h he had played such an impor tan t pa r t was the best way of showing thei r regard towards his great personal i ty; and they devoted their best a t t en t ion to the " F u n d " w i t h the result t ha t the " F u n d " grew s t rong and, w i t h its help business developed steadily in Mangalore .

The Canara Bank In 1910, the Board of Directors , at

the suggestion of Shr i K Subrama-n iam. who had played an impor t an t par t in the .spreading of commercial education in Bombay, reconst i tuted the "Fund1 ' in to a regular B a n k and appropr ia te ly named it as the "Canara Bank L i m i t e d . "

W i t h the r enaming o f the i n s t i t u -t ion , regular b a n k i n g business came to be conducted to the g rea t advant ­age of the people. The resources of the B a n k s teadi ly increased. As per Ar t i c l e s of Associat ion, the B a n k had set apa r t as h i g h a par t of i ts proftts as 25% towards reserves even f r o m i ts inception. The Bank gained in prestige year by year, and its fame as a beneficent ins t i tu t ion spread f a r and wide. Even f r o m i ts inception i t had been cha rg ing Inter­est on loans at rates wh ich were moderate in re la t ion . to p reva i l ing interest rates and was g i v i n g every f a c i l i t y to merchants to develop the i r business. The B a n k has f o l l o w ­ed the p r inc ip le—In the prosperi ty of i ts consti tuents lies the prosper i ty

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of the Bank . By exercising modera­t i o n and caution in advanc ing money, i t had checked m a n y a businessman f r o m under t ak ing perilous specula­t ion and had thus acted as a steady­i n g force.

Economy I t is in teres t ing to note how the

Bank exercised strictest economy in i ts expenditure. At f i r s t the B a n k was located in a smal l rented bui ld­i n g pay ing only Rs. 120 as rent per year. Even the safe was lent by a member of the Boa rd of Directors : Other i tems of expenditure were re­duced to the m i n i m u m . I t was only in June 1916 t h a t the o r ig ina l pre­mises were purchased by the B a n k . I n c i d e n t a l l y i t may be mentioned t h a t the General Body meetings of the shareholders of the B a n k were t i l l 1917 held in the Canara H i g h School. Manga lo re !

Facing the Crises At the beginning of the second

decade of the l i fe of the Bank , i t had to face the commot ion caused by the fa i lure of m a n y banks in the years 1913-1914 and la ter the excite­men t caused by the outbreak of a W o r l d W a r in 1914,

B u t the clientele reposed such confidence in the management t h a t the Canara B a n k no t on ly remained unaffected by these crises bu t emerg­ed s tronger t h a n i t h a d been before. By careful s c ru t iny and by the best­o w a l o f f u l l a t t en t ion to the affairs of the Bank , the Direc tors were able to conserve i t s profi ts and bu i l d up considerable reserves. In the report of the Direc tors in 1915, they have recorded ' 'In spite of the disorgani­za t ion in the f inancial and commer­cia l w o r l d consequent on the cont inu­ance of European W a r , the business was sat isfactory and progressive."

Ano the r crisis came over the Bank­i n g W o r l d in 1922-1923 when several ema i l banks collapsed a l l over I n d i a . Bu t the cautious policy ad opted and the goodwi l l earned kepi the Canara B a n k out of the w h i r l ­pool . In fact i t had been so f o r t i f led by the goodwi l l of the people a n d t h e steel f r ame of the adminis t r a t ive mach ine ry t h a t the period of depression of 1928 and thereafter and the panic caused by the crash of the Travancore N a t i o n a l B a n k in 1938 passed over i t s head doing it no h a r m . When the then Chief M i n i s t er of Madras , Sh r i C Rajagopala cha r i proposed i i 1938 t ha t the bank; do v o l u n t a r i l y request the Reserve B a n k o f I n d i a to look i n t o the i n t e rn

a l affairs o f the B a n k to a l l ay the apprehensions of the people, the Canara B a n k immedia te ly and un­hes i ta t ing ly accepted the advice, an act wh ich enhanced i ts prestige. D u r i n g the Second W o r l d W a r too, the Bank remained wa tch fu l and a l ­ert, and t h r o u g h i ts General Mana­ger's Office at Bombay studied the Na t iona l and In t e rna t i ona l trends in finance and steered i tself clear of a l l p i t fa l l s and depths. The s t rength of the Bank can be appreciated not only because of this passive achieve­ment but of the continued s t rength and popular i ty i t has gained th rough the years. In fact i t has become "Our B a n k " to a l l those who had connection w i t h i t .

Expansion F r o m the year 1918. Shr i A Sr in i -

vasa Pai , a leading lawyer of M a n -galore a n d one who was associated w i t h the B a n k f r o m i ts ve ry incep­t i o n became i ts President and gu id ­ed the affairs of the B a n k fo r the next twentyf ive years w i t h ab i l i ty , tact, patience and forethought . H i s experience, wisdom and knowledge of affairs helped the Bank to bu i ld up i ts s t rong organiza t ion and per-stige.

F r o m the year 1926, began the re­markab le development of the B a n k in a l l directions. The management fe l t t h a t the Bank had g rown suffi-c ient ly s t rong d u r i n g the precious twen ty years and steps could then be taken for r emoving its local mant le and t r a n s f o r m it in to a Bank, s t rong enough to ca r ry on the ever-increasing act ivi t ies of modern bank ing in any par t of the country .

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THE ECONOMIC WEEKLY November 17, 1956

Thi s could, only be possible i f the share capi ta l and the resources of the B a n k were Increased, If the branches could be spread over places i n t e r - l i nked w i t h each other by t rade and business, i f modern b a n k i n g faci l i t ies of a l l types were extended to the general public. At the same t ime i t was equally essential to bui ld up a s t rong and Impersonal a d m i n i ­s t ra t ive machinery w i t h a we l l t r a ined staff able to give courteous and efficient service to i ts clientele.

Increase in Capital and Resources A casual glance at the annual

balance sheets of the B a n k reveals how careful ly and how in confo rmi ty w i t h the g r o w t h of the business, the share capi ta l of the Bank has been raised f r o m t ime to t ime. The fact t h a t the o r d i n a r y shares and the preference shares issued f r o m t ime to t ime were qu ick ly purchased even in t imes of f inancial uncertainty shows the confidence reposed by the public in the Bank . The Balance sheets also show wha t a large par t of the profits has been t ransferred to the Reserve Funds of var ious types. The resources of the Bank on ac­count of i ts increasing business ac t i ­vi t ies has g r o w n th rough the years. The g raph of the rise of the re­sources can be noted to be steep.

Spread of Branches As the resources of the B a n k i n ­

creased and the circle of Its clientele widened, the need to increase bank­i n g faci l i t ies by opening branches at places in t e r - l i nked for t rade and money t ransact ions w i t h Mangalore and other Inter-dependent towns was realized and s lowly and after much mature consideration, branches were opened at var ious places- To­day, they are spread a l l over South India , a t a lmost a l l the i m p o r t a n t trade centres and ports . The first branch was opened at K a r k a l a In 1926; la ter another was opened a t Coch in . B r a n c h e s were opened at select centres in South Kanara , Malabar , Mysore State and Bombay Presidency. The Bombay branch was opened as ea r ly as in 1928. The year 1945 saw the open­i n g of 9 new b r a n c h e . some of them being in the T a m i l d is t r ic ts . A f t e r t h a t year, branches were opened in the Hyderabd State, one at Nagpur (1946) and .another at K a r a c h i (1946) Today, the B a n k has 51 b rand ie s pursu ing a u n i f o r m pol icy of f inanc­i n g business in the ve ry best interest of a l l concerned.

Increase In Work The h i s t o r y o f the B a n k has also

shown how g r a d u a l l y i ts scope of business has bean extended a long careful , well-defined l ines . In the ear ly days the loans t h a t were g ran t ­ed were either loans on the security of go ld or were unsecured loans to we l l -known part ies. But g radua l ly , as scientific knowledge of the b a n k i n g principles developed and spread, the B a n k was quick to offer va r ied services, w h i c h a modern bank could give, services both to the investors and to the borrowers . To ­day, an increasing number of people are becoming clients of one type or another of the Canara B a n k .

The Foreign Department A great step f o r w a r d was t aken

by the Canara B a n k when i t opened i ts foreign depar tment in 1953 a n d undertook the complicated task of h a n d l i n g the foreign business of i ts customers who conduct i n t e rna t iona l trade or t rave l abroad. In this task, i t secured the services of Mr D Freeman, who was fo r t h i r t y years an officer in t h a t depar tment of the L loyds Bank . London . He not on ly organized the foreign depar tment of the Canara Bank but also t ra ined several members of the staff of the branches in the technique of hand­l i n g fore ign business. F o r this pur­pose, regular classes were held at Bangalore to t r a i n members of the staff. La te r several other members of the staff also received inst ruct ions f r o m h i m a t branches. This careful t r a i n i n g has enabled the branches to handle this new business in te l l igent ly and efficiently. Today, this foreign depar tment has become a na tu ra l and an in tegra l part of the Bank 's ac t i v i t y .

'Foreign Trade Digest' W h i l e on this subject of Fore ign

Trade, a few words may be said about some special services the Bank is g i v i n g to i ts customers in this f ield. I t publishes a regular bul le t in ent i t led 'Fore ign Trade Digest ' g i v i n g i n ­f o r m a t i o n on foreign trade and dis t r ibutes i t , free of cost, among its customers and friends doing fore ign business. Through the medi­um of th is magazine, and t h r o u g h other measures, a special effort is f u r the r made to s t imula te par t ic ipa­t i on by i ts customers and others in i n t e rna t iona l trade fairs , specially those sponsored by the Government of I n d i a . The B a n k also sends i ts o w n posters for display in such in te rna t iona l fa i rs a n d exhibi t ions .

Structure of Administration The efforts of the B a n k to increase

the efficiency of i t s o rganiza t ion can

be noted th rough the years. When the B a n k was v e n t u r i n g on its career of expansion', i t i n v i t e d in 1931 S h r i Vidyasagar Pandya, M L A, an emi­nent leader in the f ie ld of bank ing at Madras to make suggestions re­ga rd ing al terat ions of the Memoran­dum and the Ar t ic les of Associat ion and for the improvement of the or­ganizat ion of the a d m i n i s t r a t i o n . His valuable suggestions were adopt­ed w i t h great profi t to the B a n k . Careful a t tent ion was paid towards efficient control and supervision of branches. In 1943, the General Manager 's Office was shi f ted to Bombay. This was in pursuance of the policy of ra i s ing the tone of the admin i s t r a t ive structure. The f inan­cia l trends could easily be watched f r o m such a b ig f inancial centre as Bombay and the B a n k could get the f u l l benefit therefrom. A g a i n w i t h the opening of several branches spread over a large area the admin i ­s t ra t ive office was shif ted in 1954 f r o m Mangalore to Bangalore a more centra l place f rom where guidance to the branches could be given in the quickest possible t ime and better co­ord ina t ion could be effected. The special a t ten t ion bestowed by the management on the cons t i tu t ion of the steel f rame of admin i s t r a t i on has not on ly increased its a l l - round effi­ciency but has also made it quite Impersonal bereft of redtapism. The advice given by the Reserve Bank f rom t ime to t ime and after its peri­odical Inspections has also been in-corporated in the conduct of busi­ness. An eminent Banker w h o observed the organizat ion of the Bank f rom close quarters r emarked " I f a l l the Directors o f your Bank and its pr incipal officers are replaced in a moment by their wives, the ad­min i s t r a t ion wou ld s t i l l remain un­affected." This humourous r e m a r k conveys the true na ture and the i m ­personal character of the s t ruc ture of the Admin is t ra t ive mach ine ry of the Canara B a n k .

Training of the Staff The management has bestowed

very grea t a t t en t ion on the equipment and t r a i n i n g of i ts staff as par t of i ts dr ive for admin i s t ra t ive efficiency. The present General Manager was deputed for t r a i n i n g in two leading banks of Bombay and later was sent for about six months to study in the M i d l a n d Bank in London before his appointment for the post in 1932. As a r e s u l t the adminis t ra t ive and ac­counts departments were overhauled; the loans policy of the B a n k was improved so as to increase l i q u i d i t y

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THE ECONOMIC WEEKLY November 17, 1956

a n d minimize losses; the departments o f pub l i c i t y a n d public re la t ions were b rought in l ine w i t h those existing: in advanced ins t i tu t ions .

The management a l l t h r o u g h has been receptive of new scientific ideas in b a n k i n g . In 1952, when branches had spread out and the vo lume of business expanded, the management fe l t t h a t i t would be bettor to know how such w o r k was conducted in the lead ing banks o f the West. In order to get th i s benefit the B a n k sent d u r i n g 1952- "1954 six of i ts senior officers for t r a i n i n g abroad for sis months under an ar rangement made w i t h the good offices of the Reserve B a n k o f I n d i a and the Ind ia H i g h Commissioner for the Uni ted K i n g ­d o m . They .studied modern efficiency methods, B a n k organizat ion, loans procedure; and co-ordinat ing and de­velopment technique. These Officers today occupy key positions in the B a n k and are g i v i n g the Bank the benefit of thei r t r a i n i n g .

The training- of other members of the staff has also been under taken. Since 1954 the B a n k is sending its officers r egu la r ly to the courses con­ducted by the Bankers T r a i n i n g Col­lege organized by the Reserve Bank of Ind ia .

The Canara Bank has organized two courses of its own, the basic course f o r beginners and the senior course for fixture officers, in order to t r a i n the members of its staff for i ts w o r k . It, gives them a l l the essential knowledge in banking , in­culcates in them the special t r ad i ­t ions of the Canara Bank and gives Oram i n i t i a t i o n In the technique of m o d e m banking . This has provided the B a n k w i t h a band of efficient workers pursuing a. u n i f o r m policy In order tha t the Canara B a n k m a y m a i n t a i n an i n d i v i d u a l i t y of i t s own in the service of the Na t ion and make a l l those who come in contact w i t h the B a n k acquire and re ta in a t tachment to the i n s t i t u t i o n .

The Bank was star ted w i t h on ly 4 members on i ts staff. As the vo lu­me of i t s w o r k grew and its branches m u l t i p l i e d , the number on the staff has also been increased. Today it m a y be in te res t ing to note tha t over a thousand people are w o r k i n g in i t s different branches and in i ts ad­min i s t r a t i ve offices together.

The f i f t y years of the l i fe of an i n s t i t u t i o n l i k e , the Canara Bank iS a sufficiently l o n g period to take stock of Its achievement and i ts drawbacks . The B a n k is ever a ler t to consolidate the posi t ion I t has

gained a n d b r i n g about improve­ments t h a t are necessary w i t h the passage of t ime . The management spares no pains to make the B a n k "Our B a n k " t o a l l i t s consti tuents i n whatever w a l k s of l i fe they be and in the different parts of the count ry w i t h a v iew to r a i s i ng the economic level of the N a t i o n . The Direc tors are p u t t i n g a l l efforts in m a k i n g the Canara B a n k p l a y i ts due p a r t in the economy of the N a t i o n to the best of i ts capacity.

Staff Welfare The directors have before t hem

a .scheme of r a i s ing a fund called "The Canara B a n k Golden Jubilee Staff Wel fa re Fund" . A m o n g the objects of the F u n d w i l l be the eco­nomic, social, and m o r a l advance­ment of the members of the staff and to help them to develop habi ts of t h r i f t , self-help and better l i v i n g and to give f inancial a i d to mem­bers in case of sickness, or distress, and for education of chi ldren etc. The membership w i l l be purely v o l u n t a r y and the benefits of the funds w i l l be confined to members who w i l l manage the funds under a democrat ic cons t i tu t ion . The funds w i l l be raised by m o n t h l y deposits f rom members at no t less than one per cent of the i r salary and the B a n k w i l l contr ibute a substant ia l amount to fo rm a nucleus of the Fund. I f properly worked, the F u n d is calculated to play an i m p o r t a n t par t in p romot ing the welfare of the members. I t is hoped tha t the m a j o r i t y of the members of the staff would j o i n the F u n d and w o r k i t out success­fu l ly .

The directors have also a scheme for housing loans to employees on hire purchase basis w i t h a sufficien­t l y long period of repayment . The Amount of loan would depend upon the salary of the employee and the ra te of interest wou ld be as low as 3½%. simple. T h i s would enable a number of the Bank ' s employees to have houses of thei r own-

Fur ther , the directors are also considering a pension scheme w h i c h can be chosen by the s t a f f as an a l te rna t ive to s taff provident fund and also a scheme for. employees' pa r t i c ipa t ion in Capi ta l t h rough the issue of a special class of shares. The details are be ing w o r k e d out and i t is hoped these w o u l d be wel ­comed by the employees.

Scholarship Scheme The a d m i n i s t r a t i o n of a scheme of

educational loan scholarship, how-

ever, calls for ce r ta in special qual t i e s . Thus, I t i s no t enough i f t h e authori t ies are able to spot a cand date who deserves t o get i t I t necessary to be able to keep a con-t i n u i n g w a t c h over the recipient, fo l low up his career, to k n o w pre-cisely when he becomes capable r e t u r n i n g the loan and, above a l to ensure t h a t the loan is returnee A mere ph i lan throp ic sense, though i t fo rms the basis of the scheme, is not the on ly fac tor w h i c h w i l l m a k e ft a success. Clearly, something more is needed. I t requires a bank er's ins igh t i n to the creditworthiness of candidates and the banker 's or­gan is ing a b i l i t y to supervise- the re t u r n of the loan. A scheme of edu­cat ional loan scholarship thus implies a heal thy combina t ion of educational a l t r u i sm and financial rea l ism.

It is precisely such a combinat ion t ha t is to be found in a remarkable experiment in loan scholarship that has been in i t i a ted by the sponsors of the Canara B a n k Jubilee Education F u n d . The enterpr i s ing authori t ies have evolved a scheme w h i c h seeks to blend the phi lanthropis t ' s zeal for service in the cause of education w i t h the Bank ' s o rgan i s ing ab i l i ty , on the one hand, and to supplement the donor's financial resources w i t h its own, on the other, A look at the scheme w i l l reveal that i t is bo th well conceived and ably devised, so tha t i t ought to commend i t se l f to a l l lovers of educational cha r i t y and. more especially, to those who nold that p r iva te b a n k i n g can and should render genuine public service.

Brief ly, the scheme involves the g r a n t of a loan scholarship wh ich w i l l be f ive t imes the amount placed by a donor at the disposal of the F u n d . Under th is novel scheme, the F u n d which is created by the donors is pledged as a securi ty w i t h the B a n k wh ich , in i ts t u rn , has agreed to g r a n t loans up to f ive t imes the funds g iven as security, subject to a m a x i m u m of Rs 5 l akhs . The Cana ra B a n k has I tself donated Rs 20.000 to the F u n d and the collections so f a r made amount to Rs 1,20,000. There is no doubt t ha t the whole scheme Is as economical ly sound as It is e th ica l ly w o r t h y of the highest praise.

Main Features of the Scheme I t seems necessary, a t th i s stage

to b r i n g out some of the m a i n fea­tures of the scheme. The Fund , w h i c h is a registered body ; derives

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THE ECONOMIC WEEKLY November 17, 1956

Rs 1,000 every year t i l l they com-plete thei r studies and, at the same t ime, ten fresh scholars w i l l be se­lected for a id every year.

There are several considerations w h i c h suggest t ha t the scheme w i l l achieve a l l the success i t deserves. In the f i rs t place, loan scholars a l l the w o r l d over are deeply conscious of the value of the help they receive a t the impressionable period of the i r l i fe , and, therefore, g ra t e fu l . In b a n k i n g parlance, they are a h i g h l y c r e d i t w o r t h y lot . Indeed, the ex­perience of other funds w h i c h the sponsors of the present scheme have studied has been very encourag ing . Secondly, the t a k i n g ou t of a l i fe policy and t h i r d pa r ty securi ty s t i l l f u r the r reduces the r i s k of loss.

To the donor, i t should have a special appeal, because it enables h i m to be more generous t han his purse can permit . He has the addi ­t i ona l sat isfact ion t h a t his dona t ion w i l l r emain in tac t and be avai lable on a con t inu ing basis to generations of students. He is fu r the r rel ieved

of the anxie ty to collect the loan, for the B a n k w i l l ensure t ha t i t is re­pa id . N o r need he fear t h a t the loan w i l l go to an undeserving person, for the F u n d w i l l see t o i t t h a t i t is the deserving scholar t h a t gets the a id . As regards the scholar, he ought necessarily to welcome the scheme wh ich a l lows h i m to pursue his studies w i t h o u t f inancial w o r ­ries to dis turb the even tenor of h is academic career.

P r iva te enterprise in I n d i a i s on t r i a l . A n d pr ivate bank ing , as the c i tadel of this enterprise, owes ft special responsibil i ty to the society. I t i s up to i t t o v indicate i t se l f t h r o u g h ac t ive ly a l i gn ing i tse l f w i t h schemes wh ich serve the public. I f a l l I n d i a n banks could establish "Educa t iona l Funds" on the lines of the Canara Bank ' s scheme, they wou ld be fu r the r add ing to the i r sta­ture in the public eye. T h e i r pre-sent detractors w o u l d then be com­pelled to recognise t h a t p r iva te bank­ing could be harnessed to the task of render ing efficient public service.

i ts f inances m a i n l y f r o m the dona­t ions made to i t . I t w i l l , of course, be augmented by other sources of income such as interest on invest­ments . The Bank , as already stated, w i l l ho ld the F u n d as a security against the loan i t sanctions up to f ive t imes the securi ty offered. I t w i l l charge on ly 4 per cent simple interest on these loans. Besides the f inancia l help i t renders, the B a n k w i l l make avai lable to the F u n d i ts organisa t ion for the purpose of en­su r ing the r e tu rn of the loans g iven to scholars . The scheme provides t h a t the f i rs t ins ta lment of the loan to a scholar is to be repaid not la te r t h a n one year af ter the complet ion of the course of his studies made possible t h r o u g h the scholarship.

A notable feature of the scheme is t h a t i t provides for t a k i n g out both a l i fe policy on the recipient of the scholarship and t h i r d p a r t y securi ty on his behalf. The idea is to g r a n t 10 loan scholarships of Rs 1000 each year to begin w i t h . The same group of scholars w i l l be gran ted

THE ECONOMIC WEEKLY November 17, 1956