Calicut University Banking and Insurance paper

1. History of Banking
Basics of Banking and Insurance
BC5B09, Hours 3, Credits 2
Santhosh Thannikat
santhosh@naipunnya.ac.in

2. Human Evolution and Civilization
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• Agriculture – Seed deposit and loan
• Ancient civilizations
– India
– Egypt
– Mesopotamia (Babylonia/Greek)
– China
– Mayan

3. Origin of human civilization
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4. Indian History
• Indus Valley Civilization (BC 5000 – BC 1900)
• Vedic Period (BC 1500 – BC 500)
– The Vedas comprise a vast corpus of Sanskrit
poetry, philosophical dialogue, myth, and ritual
incantations developed and composed by Aryans
over 3,500 years ago. Regarded (by Hindus) as the
primary source of knowledge and the sacred
foundation of their religion, the Vedas embody
one of the world’s oldest surviving cultural
traditions.
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6. Spice Route (Ancient Trade)
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7. Sangam literature
• A tantalizing description of Muziris is in Akanaṉūṟu, an
anthology of early Tamil bardic poems (poem number
149.7-11) in Eṭṭuttokai[15]
– "the city where the beautiful vessels, the masterpieces of
the Yavanas [Westerners], stir white foam on the Culli
[Periyar], river of the Chera, arriving with gold and
departing with pepper-when that Muciri, brimming with
prosperity, was besieged by the din of war.“
– Peppercorns were a much-prized trade good, often
referred to as "black gold" and used as a form of
commodity money. The legacy of this trade remains in
some Western legal systems which recognize the term
"peppercorn rent" as a form of a token payment made for
something that is in fact being given.
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8. Pepper as Money
• Reason for colonisation of Kerala / India
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9. Muziris Project
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10. Mesopotamia
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11. Ancient Egypt and West
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12. Ancient Silk Road
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• Trade routes not only supplied physical goods,
they facilitated the movement of people and
ideas….

13. World Trade Route
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14. Mesoamerican cultural area
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15. Maya Civilization
• cultural developments that included complex
societies, agriculture, cities, monumental
architecture, writing, and calendrical systems.
• Trade goods carried included cacao, obsidian,
ceramics, textiles, food and drink for the crew,
and copper bells and axes.
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16. Gold and Silver money
• The use of gold as proto-money has been traced back
to the fourth millennium BC when the Egyptians used
gold bars of a set weight as a medium of exchange
• As had been done earlier in Mesopotamia with silver
bars.
• The shekel was an ancient unit used in Mesopotamia
around 3000 BC to define both a specific weight of
barley and equivalent amounts of materials such as
silver, bronze and copper. This shekel was about 180
grains (11 grams or .35 troy ounces).
• Concept to the British pound, which was originally
defined as a one-pound mass of silver.
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17. Paper Money
• Paper money was introduced in Song Dynasty China during
the 11th century.
• In the 13th century, paper money became known in Europe
through the accounts of travelers, such as Marco Polo and
William of Rubruck.
• The first European banknotes were issued by Stockholms
Banco, a predecessor of the Bank of Sweden, in 1661.
• These banknotes were a form of representative money
which could be converted into gold or silver by application
at the bank. Since banks issued notes far in excess of the
gold and silver they kept on deposit, sudden loss of public
confidence in a bank could precipitate mass redemption of
banknotes and result in bankruptcy.
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18. Ancient Banks
• Lenders based in temples made loans and
added two important innovations: they
accepted deposits and changed money.
• This began around 2000 BC in Assyria and
Babylonia. Later, in ancient Greece and during
the Roman Empire. Ancient China and India
also shows evidence of money lending activity.
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19. Origin of Modern Banks
• Can be traced to medieval and early Renaissance Italy,
to the rich cities in the north such as Florence, Venice
and Genoa. The Bardi and Peruzzi families dominated
banking in 14th century Florence, establishing
branches in many other parts of Europe. Perhaps the
most famous Italian bank was the Medici bank,
established by Giovanni Medici in 1397.
• The oldest bank still in existence is Monte dei Paschi di
Siena, headquartered in Siena, Italy, which has been
operating continuously since 1472.
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20. Value of Money
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21. Gold Price in India
22,000 tonnes of gold stocks kept by Indian households.
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22. Richest country
• 22,000 tonnes of gold stocks kept by Indian
households.
• 10 – 15% World Gold Demand is from India
• Import duty is 10%
• 800 – 1000 tonnes added every year
• This is without the collection in the ancient
chests
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23. PetroDollar
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