Banking

As already discussed, the employees of Banks were nothing but bonded labourers.

Besides the employees, there were a kind of contract workers like ‘Open Loan Representatives’, ‘Godown Representatives’ etc.

The Banks lend, keeping something as ‘Security’ for them so that if the borrower fails to repay the loan, they can fall back upon the Security and realize its value to obtain repayment of their loan.

For this, there are certain types of ‘charge’s on the Securities—like ‘Hypothecation’; ‘Pledge’, ‘assignment’, ‘Mortgage’ etc.

So the Banks take ‘charge’ of the ‘Security’ before lending, so that they can enforce their charge, if necessary, at a later date, if the loan is not repaid.

Generally ‘Open Loans’ are allowed against the charge ‘Hypothecation’.

This is a funny kind of charge—as under this charge, the ‘physical possession’ of the security is with the borrower, but its ‘ownership’ lies with the ‘hypothecatee’ i.e. the Bank!

So, how to have an effective control on the ‘hypothecated’ stocks? The Banks invented the system of ‘Open Loan Representatives’, who will be stationed at the borrower’s premises, supervise the movement of ‘stocks’ and if they are sold, see that the Bank’s share of the sale proceeds are deposited with the Bank!

For their remuneration, they were paid on daily/hourly basis, charging the same to the Customer’s account (Open Loan Borrower’s account)!

………to be continued.