Heaps of non-performing loans, cash crunches and money laundering have weighed down Bangladesh's current banking sector. The present state of this sector is gloomy and fragile. However, 300 years ago, this sector was more systematically controlled by a single man named Jagat Seth.
Even though the descendants of Jagat Seth were seen as the masterminds of hatching the Plassey conspiracy – shaking hands with Mir Jafar and the British imperialists – they are less recognised for their excellence in trade and banking. They emerged at a time when there was no conventional bank in the subcontinent.
The family of traders controlled half of Bengal's economy and became the financial advisor to the nawabs.
The family's prosperity reached its peak during the time of Fateh Chand. However, the family's legacy was set out by Hirand Sahu, who turned into a money lender from a jeweler after travelling all the way from Naguar to Patna in search of a better living.
Hirand was a great financial manager. During his time, Patna was a prosperous city and an important business hub because of its riverways used for trade.
Fateh Chand had surpassed all his predecessors in extensive networking and expertise in financial and banking matters. Emperor Mahmud Shah conferred upon him the title of Jagat Seth – banker of the world – for his extensive hundi network, monopoly in the currency business and expertise in banking operations.
From minting, selling and purchasing bullions, collecting revenue and remittances, and dealing with foreign traders, to controlling exchange rates and lending to emperors and zamidars – Jagat Seth's House operated much like the central bank of that time.
Jagat Seth's estate was considered the king's treasure and he prospered and expanded his dominance over Bengal, Bihar and Orissa so rapidly that his family was compared to that of the Rothschilds in Europe. Jagat Seth's House was even compared to the Bank of England. The power and influence he exercised was believed to be second to that of the nawab. The nawabs had to take his advice on every important decision and expenditure.
Though the title of Jagat Seth was bestowed on Fateh Chand, his later generations were also referred to by this title.
Describing their riches, Historian Ghulam Hussain Khan wrote, "Their wealth was such that there is no mentioning it without appearing to exaggerate and deal in extravagant fables."
And a Bengali poet wrote, "As the Ganges pours its water into the sea by a hundred mouths, so wealth flowed into the treasury of the Sheths."
In addition to financial expertise, their political instincts were very sharp. They had the power to put someone on the throne and remove them.
As it was a flourishing time for Bengal's trade and export, the Dutch, English, French, and Armenians came to Bengal for business – and the export trade was centrally controlled by Fateh Chand.
In 1722, during Fateh Chand's dominance, there was a currency crisis. The scarcity of silver coins led to a man-made famine which put thousands of people on the verge of death. In such a situation, Fateh Chand – in an agreement with the emperor – distributed hundi from his Delhi trading house. This hundi was treated the same as silver coins. Over time many nawabs came and left but the influence of Jagat Seth's family grew.
During the Bargi invasion, they carried away three to four crore Arakan coins with them as their bounty. This was 30 to 40 million rupees of that time but the large amount did not deter the great Sheths from conducting their business.
Even the East India Company used Jagat Seth credit facilities. It is believed that between 1718 and 1730, the imperialist company borrowed, on average, Rs400,000 annually from the Jagat Seth, as mentioned by William Dalrymple in his book "The Anarchy."
Understanding the mutual benefits of an alliance with Jagat Seths, the East India Company befriended Jagat Seth to establish imperialism in India. The mutual reciprocity of the two financial giants changed India's political course.
When Sirajuddoula came into power, he began to alienate the Jagat Seths, who had long been the advisors of the nawabs. To remove Sirajuddoula from power, Jagat Seths – in alliance with Mir Jafar – sold the country to the East Indian Company. However, the act of treachery and disloyalty to their own country eventually brought about the great Jagat Seths' downfall.
After Mir Jafar, his successor Mir Qasim ordered the assassination of the two Seth brothers – ending the luminous chapter of power and influence of the Jagat Seths in Bengal.
To know the rise and fall of the Jagat Seth's banking empire, scan the QR code and watch the YouTube video: