Building institutions requires grit, determination and extremely competent people at the helm of affairs. In his seminal book, Barons of Banking: Glimpses of Indian Banking History, Bakhtiar K Dadabhoy uses the recently released Sir James Taylor papers, along with other material, to narrate a fascinating tale?a tale of men who built the venerable institutions that have become household names today. In what can be described as an extremely ambitious venture, the author seamlessly combines banking, finance, economics, history, biography and anecdotes to produce a rich and varied tapestry, which is a sheer delight to read. Dadabhoy?s prose is lucid and, with his penchant for colourful anecdotes, he manages to keep the reader interested in what might have been a dull biography of men and institutions.

The book essentially covers the vision and accompanying struggles of six banking personalities who set up institutions of eminence. Divided into four parts, the personalities whose contributions are narrated through the history of five seminal financial institutions are Sir Sorabji Pochkhanawala, the founder of Central Bank of India; Sir Purshotamdas Thakurdas, business statesman, public figure and central banker; Sir CD Deshmukh, RBI?s first Indian governor; RK Talwar, the redoubtable former chairman of SBI; AD Shroff, economist, banker industrialist and institution builder; and HT Parekh, the man who pioneered retail finance for housing in India. Thus, we have the history of five institutions, namely, Central Bank of India, Reserve Bank of India, State Bank of India, ICICI and HDFC, spun around the contributions of the six legendary institution builders.

In Book I, Dadabhoy gives us an interesting account of the establishment of the Central Bank of India and its founder Pochkhanawala, including a flavour of the times when there were numerous runs on banks, and the reasons behind them. In Book IV, another luminary from the world of finance whose contributions have been highlighted for the first time in a book on banking is Parekh whose contributions at ICICI and his founding of HDFC make for fascinating reading.

Book II has a substantial portion on the RBI, which is a must-read. The theme and timing of this chapter are appropriate?at a time when the remit and accountability of the central bank are being re-examined, and far-reaching changes have been recommended by the Financial Services Legislative Reforms Commission (which, if implemented, would result in major changes in the working of the bank and India?s financial sector). It is, therefore, interesting to take a peep into the past to examine the relations between the RBI and the government in the early days of the bank. The epistolary evidence reveals a level of candidness and acrimony, which can only be described as amazing. The reader comes to an obvious conclusion that the relationship between the central bank and the ministry has witnessed several ups and downs in the early years. So much so that you have a finance minister writing to a RBI deputy governor that his governor is a ?thorough crook? and makes money!

For a contemporary feel, the book brings into public glare a major controversial episode in the RBI?s early history?the disagreement between Sir James Grigg, ICS, the finance member of the viceroy?s executive council, and RBI?s first governor, Sir Osborne Smith. Sir James Taylor, who was RBI?s deputy governor then, was also from the ICS and the two seem to have ganged up against Smith, a professional banker. Interestingly, this episode barely finds mention in the official history of the RBI, which has chosen to euphemistically term it a case of ?temperamental incompatibility?.

Smith?s short tenure, which commenced in April 1935, was punctuated by considerable controversies and conflicts. Central to the whole episode was the fight by Smith for independence from the government. Grigg had an unusually assertive and abrasive personality, but it was much more than just a clash of personalities. During Smith?s tenure, the two most important and controversial issues were the rupee-ratio and the bank rate. The real controversy between Smith and Grigg was on the appropriate level of the bank rate. Smith favoured a reduction in the rate, believing that ?cheap money? could help during the Depression. The issue was of reducing the bank rate from 3.5% to 3% and, apart from the merits and demerits of such a change, what seems to have been of greater importance to Grigg was whether he was consulted on this subject. Smith, in a letter to Thakurdas, a prominent businessman and a founder-director of the RBI, spoke of the continuous attempts by Grigg to dominate the bank and how, if Taylor became governor, the bank would become a ?mere department? of the government. But Smith himself was a controversial governor with allegedly questionable financial dealings. The Calcutta branch of the Central Intelligence Bureau started investigations after frequent and erratic fluctuations in the share prices of the RBI, which led to rumours that a certain official (Smith) had been in cahoots with a few businessmen and they all had shares in the profits.

The incident apart, the book narrates in some detail the events and politics which preceded the setting up of the RBI, its role during World War II and CD Deshmukh?s contributions at Bretton Woods and the issue of India?s sterling balances. The rupee-ratio controversy, which excited many passions in the first few decades of the last century, and Thakurdas? role in protecting Indian economic interests are also covered in detail.

The chapter on Talwar throws light on another banking versus government relationship. Here, Dadabhoy narrates the tribulations of this legendary SBI chairman who was known as much for his integrity as for his professionalism. He brings into focus details of Talwar?s premature departure from the bank on his refusal to oblige Sanjay Gandhi during the Emergency. The SBI Act was amended to facilitate his removal, a Bill which became famous in banking circles as the ?Talwar Hatao Bill?.

My advice to the reader, though, is that at 552 pages, the book is a bit long. The reader has his work cut out for him, given that the book is not always an easy read. But this is a mere quibble and those who have the patience to persevere will be amply rewarded. For the chapters on Smith and Talwar alone, this well-researched and scholarly book is a must read.

Dakshita Das is a civil servant and views expressed here are personal