Economic Thought of Panchanan Barma and Kshatriya Bank: A Brief Study on Historical Perspectives
Kartick Chandra Barman
History, Krishna Chandra College, Hetampur, Birbhum, West Bengal, India
To cite this article:
Kartick Chandra Barman. Economic Thought of Panchanan Barma and Kshatriya Bank: A Brief Study on Historical Perspectives.History Research.Vol.3, No. 2, 2015, pp. 35-40. doi: 10.11648/j.history.20150302.13
Abstract: Panchanan Barma was the father of the Rajbanshi Community of Undivided North Bengal. He sacrifices his life for the society of the Rajbangshi Community. He had taken many reformation works for the recover the lost dignity of the Rajbanshi Society. He was shocked contemporary social discrimination and economic exploitation. Zamindars and moneylenders had crippled the rural economy by the rampant exploitation. In order to protect the exploited peasant society, he founded the rural agricultural Bank, namely "Kshatriya Bank". Keep in mind that it was the first rural Agricultural Bank for the farmers. He was thinking about the formation of Kshatriya Bank for the ventures of rural development.
Keywords: Father, Thought, Kshatriya Bank, Society, Economy, Status, Development
During the first half of twentieth century Bengal, many social reformers were worked for the people of South Bengal. But, there was no any social worker except Panchanan Barma in the contemporary North-Eastern Bengal. He worked for his communities as well as other backward communities of North-Eastern Bengal. Before entering the subject of economic reform of the Rajbanshi society, it is necessary to learn something about the economic circumstances of British-ruled Bengal and for that matter, of British-ruled India as a whole. Most of the Indian historians have termed the eighteenth century as the ‘century of anarchy’, because there was ostensibly no strong central power in India. On the other hand, factional feuds, revolts of provincial rulers (subahdars), establishment of independent kingdoms in different parts of India, foreign invasions, regional rebellions, e.g. rebellions by Satnamis, Sikhs, Jaths, Rajputs, and Bundelas etc led to a deterioration of order and peace in the country. Bengal, however, was largely free from such disturbances, because from the period of Murshid Quli Khan to that of Alivardi Khan there was the rule of peace in general in Bengal, which helped in its economic progress. The northern fringe of this undivided Bengal and the native kingdom of Coochbeher were largely inhabited by Rajbanshis.Besides, the agricultural activities of a peace-loving and industrious Rajbanshi community, aided by fertile soil and a natural irrigation system, helped in Bengal’s economic prosperity. In those days, duties or sayers on hats (periodic rural markets), bazaars (more regular markets), hats (points of transit on waterways), agricultural produce etc on various counts constituted a significant portion of the state’s revenue.
The main objectives of this paper are to focus the baseline socio-economic information for the people of the Rajbanshi Community as well as other backward communities at the same time. Most of the people of the community are involving in Agriculture and living in different villages. Their only earning source is agriculture. A few persons of the community are engaged in business or government services. On the eve of the British rule in India, they exploited in economically by the local land lords under the supervising of colonial rulers. During the 3rd decades of the 20th century Bengal, the economic status of the Rajbanshi community became low and they always received money from money lender as loan to regularize the agriculture works. But they did not repay that loan due to high interest. As a result, they lost their all properties to the land lords. In the circumstances, Maharshi Panchanan Barma established a small Bank namely, Kshatriya Bank in 1327 B.S. for the farmers. There was no any govt. bank in the area. At the same time, Kshatriya Bank had influenced among the farmers as well as other general peoples of the contemporary society. In a short time, Kshatriya Band flourished in Dinajpur area under the management of the Kshatriya Samity (society) led by Panchanan Barma. Subsequently, getting inspiration from Kshatriya Bank of Panchanan Barma, several projects on Micro-finance had been flourishing in every parts of Eastern Bengal.
3. Literature Review
Literature is the mirror of any society or country. Literary works gives us vital information about the certain period that what had done. It not only bears the data about any societies, states, countries, lands, as well as any particular or general communities in a specific period. It presents to us all information about the social, economical, political, cultural, and religious data to us. Before going to write this paper I read some of the literary books, i.e. Bengali, Assamese and Rajbanshi languages. As well as I have studied about the society and culture of the Rajbanshi community through different Govt. Gazetteers, Reference Books, Magazines, Patrikas, periodicals & proceedings, tracts & treaties besides several Research Articles about the Rajbanshi community and Manishi Panchanan Barma. A few name of the important books are mentioned here like, Adhikari, Harakishore, Rajbanshi KulaPradip, (1314 BS). Barman, Upendranath, Rajbanshi Kshatriya Jaatir Itihas vol. I, (1941),Thakur Panchanan Barmar Jiban Charit, (1387 BS), Uttar Bangar Sekal O Amar Jiban Smriti, (1392 BS), Deb Singha Barma, Kshatriya Rajbanshi Kula Kaumudi, (1317 BS), Kabyabhusan, Maniram, Rajbanshi Kshatriya Deepak, (1318 BS.), Roy, Chandreswar, Uttar Banga Rajbanshi Samajniti, Calcutta, (1333 BS.), Roy, Pulin Bihari, Sekaler Agradoot Ekaler Bismay Thakur Panchananer Itibritta, (1389 BS), Dharma, Narayan, RaiSahebPanchanan, (1391 BS).As well as I met with some Rajbanshi writers to do collect actual information about the Rajbanshi community, Panchanan Barma and his Kshatriya Bank.
4. Research Methodology
Method is the way of approach and procedures adopted in acquiring data. To reach in the objective of this research paper primary data has been collected from the kshatriya Samity led by Panchanan Barma and secondary also has been collected from different books, journals, periodicals, magazinesregarding socio-economic, cultural status of the Rajbanshi community, Panchanan Barma and his KshatriyaBank etc. Survey research is a method for collecting and analyzing data, obtained from large number of cases representing a specific population. The present study is about "Economic Thought of Panchanan Barma and Kshatriya Bank."It is the best way to proceed towards any goals through a legal methodology. Obviously, I already have used some methodology before going to write the certain research paper. All information is collected from primary sources, secondary sources and through Interview method.
5. Economic Condition
From Salimullahs account, it is known that Murshid Quli Khan divided Bengal’s land resources into three categories, (i) cultivated, (ii) uncultivated and (ii) fallow. Although he could not arrange a survey of the entire land resources of Bengal, he used to collect revenues on the basis of the existing circumstances, considering the amount of the produce and the conditions of the peasantry. In order to enhance the amount of revenue, Murshid Quli Khan altered the revenue system as well as the administrative structure, which helped him in attaining his objective. Among the thirteen chaklas of those days, two were mostly inhabited by Rajbanshis. They were a) Ghoraghat, and b) Kuribari (Cooch-beher and some territories of Assam). There is, however, a debate among historians about Murshid Quli’s method of revenue collection. As a matter of fact, the impact of Murshid Quli’s revenue system on the agrarian economy of Bengal was deep. On the other hand, he was severe in this matter and never granted any concession about the dues payable to the state. In other words, peasants were never spared the severe exploitation imposed on them by the state.
It may be mentioned that economic historians have divided the eighteenth century economy of Bengal into two periods, one, the pre-Plassey period and the other the post-Plassey period. In the post-Plassey period, the reins of the Bengal economy being held by the English East India Company, and the control of the Company’s government being excessive, peasants, artisans and labourers did not benefit at all. In a nutshell, this provides a rough glimpse of the eighteenth-century Bengal economy.
Again, as far as the colonial economy is concerned, economic historians lay greater stress on phenomena like population, national income, land revenue system and revenue policy, farmers and markets of farm produce, activities of moneylenders and conditions of labourers, industrialization etc. Figures of birth and death rates, of the growth and decrease of the population, average expectation of life, the occupational structure and the rural-urban division-all these may provide a glimpse of the economic structure. In our country, the first Census was taken in 1872. Thereafter, it began to be taken after every ten years. From the 1901 Census it was found that during 1891-1901, the population of India grew by 30 millions, while 12.2 person died in famine( according to official estimate).Again, it is found that during 1872-1881, the average longevity of Indians were 24 years among the adults and 6 years among the children. These figures were 20 and 2 years respectively during 1891-1901.Again, the Census Report of 1921 showed an extremely modest increase during 1901-1921, only 20 millions. Various types of epidemics and consequent high death rates were responsible for this state of affairs. From the census figures of British India, one can make a surmise about the economic structure of those days. We are informed of the numbers of employed labour force and relative shares of agriculture, industry and commerce in this respect. Daniel Thorner has, however, expressed a contrary opinion, arguing that in colonial India, artisans often sold their own products in periodic and more regular markets and it was difficult to classify him under one single occupational category. Besides, methodological changes in the task of distinguishing between different occupational categories resulted in discrepancies, which made it difficult to compare the data of one census with another. Yet one can make a guess about the economic conditions of contemporary Indians from the figures of per capita annual income. For instance, we can refer to Dadabhai Naoroji’s estimate,  according to which the per capita income of Indians was Rs 20 in 1867-68. It may be mentioned that one of the major clues to an understanding of the economic situation of British India is an understanding of the land settlements introduced by the English. Different types of settlements were in operation in different parts of India. For example, the land revenue settlement in Bengal was named ‘Permanent Settlement that in the Madras and Bombay Presidencies was named the Ryotwari Settlement and the revenue system in the Punjab and North India was called the Mahalwari Settlement. These settlements do not afford a full insight into the working of the rural economy, but they provide some rough ideas at least. It can be argued in a nutshell that the English had wanted a subservient class structure in the countryside, some improvement of farming and maximum revenue with least agrarian unrest. That is why the English created various land policies and revenue systems in various provinces.
By the first half of eighteen century, the centifugal forces had dissolved the over-arching centralised Mughal empire into regional states.  By 1761 the Mughal empire was empire only in name, as its weaknesses had enabled the local powers to assert their independence.Bengal, Hyderabad and Awadh were the three successor states of the Mughal empire, in the sense that they were founded by Mughal Provincial governors who never formally severed their links with the centre, but vitually exercised autonomy in matters of execution of power at the local level. The province or the Subha of Bengal gradually became independent of Mughal control after Murshid Quli Khan became the governor in 1717.  The foundation of Murshid Quli’s power was of course his very successful revenue administration, which even in the days of political chaos elsewhere in the empire, made bengal a constantrevenue paying surplus area. James Grant had described Murshid Quli’s tenure as "a new and illustrious era of finance". 
In 1765, the East India company had acquired the Diwani to do control over the revenues, of Bengal, Bihar and Orissa.  As eastern India thus came under control of the Company by 1765 after received the grand of Diwani.  Initially, it made an attempt to continue the old system of revenue collection through it increaced the amount to be collected from Rs.18, 180, 000 in 1764 and 23, 400,00 in 1771 respectively. But in 1773, it decided to manage the land revenue directly. The attempt of the officials was to secure the maximum amount. As a result, the the rates of revenue were fixed very high. Between 1765-66 and 1793, land revenue demand nearly doubled. Once result of this high and impossible land revenue demand was that nearly half the Zamindari lands were put up for sale between 1794 and 1807. Before 1793 the Company was troubled by fluctuations in its chief source of income, the land revenue. TheCompany was faced with a constant financial crisis as Bengal revenue had to finance its army engaged in wars of expansion, the civil establishment in Bengal, Madras and Bombay and the purchase of manufactures for export. The Permanent Settlement guaranteed stability of income. The newly created property of the zaminders acted as a security of this. 
In 1793, Lord Cornwallis introduced the Permanent Zamindari Settlement in the Bengal Presidency. There a few principal reasons for enforcing this type of settlement. (i) After the assumption of diwani (revenue administration) in 1765, the English East India Company was all at sea about revenue assessment and collection.(ii) They thought that private ownership of land would expand and improve cultivation at the initiative of landowners. (iii) Cornwallis had expected the new landlord class to be loyal supporters of the English. (ii) They enforced the law that failure to pay revenues in time on the part of zamindars would put their mahals into auction sales and thus the arrears would be realized, which is known as the unset law. In other words, there was a trend of transfer of estates whenever the zamindars proved inefficient in the management of their estates. In reality this land settlement and method of revenue administration failed to achieve its purpose because although the assessed revenues were collected, there was no scope of increasing this assessment. On the other hand, neither the peasantry, nor the government could enjoy the surplus that was generated. This surplus was appropriated by the intermediary zamindars and the pattanidars and ijaradars, who were landholders under the zamindars.Naturally the English Company was disillusioned about the Permanent Settlement and began to think of other types of revenue systems. But the conditions of peasants gradually became more and more pitiable. This was in short the agrarian situation in Bengal.
Thomas Munro was the father of the system of Ryotwari Settlement. This land revenue system was put into effect in the Madras Presidency. The essence of this system was direct settlement with the ryot. Here too there was the problem of assessing the amount of revenue. Although there was a dispute on this issue, Munro assessed it as 50% of the produce. In the Bombay Presidency too direct and temporary settlements were made with the ryot. Although the revenue arrangements were similar, there was a difference. In Bombay, stress was laid by Elphinstone on the ancient nature and administrative efficacy of the village community. The Mahalwari Settlement, which was formulated by effecting some variations of the earlier three systems, was enforced in the Punjab and Central India. In case of the Punjab, the village community was the lifeline of the rural society, and in Central India, there were small zamindars called malgujars. Again in Oudh, the East India Company made a settlement of 30 years with Talukdars. Now the question is about the relative expansion of these settlements.According to one estimate of 1928-29, the shares of zamindari, ryotwari and mahalwari settlements were 19%, 29% and 52% of cultivable land respectively.  The consequence for the farmers was disastrous since, in the absence of adequate facilities for marketing his produce, they had to borrow from moneylenders at high rates of interest for paying their revenues and often they failed to repay. The result was that they had to give up farming activities, and the upshot was epidemics and famines. Factors like drought and other natural calamities were also there. The Industrial Revolution in Britain further worsened the conditions of the peasantry, because domestic manufactures were badly hit and artisans had to fall back on agriculture, leading to a severe rise in the man-land ration.India became the supplier of raw materials to Britain. In the upshot, the rural-based Indian economy was devastated.
6. Economical Efforts of Pachanan Barma
So much about the economic conditions of India under British rule, Panchanan Barma was the pioneer in the task of economic reforms of the Rajbanshi society. The economic background of the Rajbansi community must be brought into discussion in order to understand the subject. Rajbansis formed the majority of the population in the districts of Dinajpur, Rangpur and Jalpaiguri of contemporary undivided Bengal, in the native princely state of Coochbiher, in lower Assam, in the area adjacent to Tura of present Meghalaya, and even Jhapa and Morang districts of the present state of Nepal. Here not only Hindu Rajbansihs, but those who adopted Islam are to be taken into account. Besides, large numbers of Rajbanshis lived in the districts of Bagura, Rajshahi, Syllhet, North Mymensingh, Maldah and Darjeeling. More than 90 % of this population lived in villages, and land was their principal economic resource. Agriculture was the main economic basis of the livelihood of the Rajbansi society. It may be mentioned that although peasants of other parts of Bengal turned to some extent to other occupations, the Rajbansi society refrained from it. The zotedar class (the class remaining next to the zamindars in the hierarchy of landowners) of the Rajbansi society took an active role in passing the anti-ryot law. On the other hand, the law of the rights to tenancy (Prajaswatta Ain) could not free the peasantry from agricultural indebtedness and usurious exploitation.
Panchanan Barma, the social reformer, was pained at the misery and distress of the Rajbansi peasantry and he began to reflect on how the peasantry could be freed from the social discrimination and economic exploitation of contemporary society. Barma said, "No community can prosper only attaining a position of social dignity unless it attains economic prosperity also."
7. Activities of Kshatriya Bank
In fact economic reform formed one of the more remarkable reformist activities of Panchanan Barma. He set up a concern named Barma Company that operated within the region now known as Bangladesh. The real objective of the Company was to free the rural poor peasants from the exploitation by landowners and moneylenders. The most remarkable of Panchanan Barma’s economic reform activities was the formation of ‘Khastriya Bank’. In the areas then predominantly inhabited by Rajbansis, a change was noticeable.The people of the Rajbanshi community were trying to shift from the mainstream of their traditional economic system.  PanchananBarma understood that no social upliftment of the community was possible unless the community could be economically strengthened, and hence he set up the ‘Khastriya Bank in the Bengali year 1327  B.S. (Bengali Era)
In order to understand the nature of functioning of this bank, it is necessary to have some knowledge of the banking system in greater Bengal. The sense in which the word ‘bank’ is used was absent in the pre-Plessey period. In the eighteenth century, the banks’ functions were divided into three categories. One was the acceptance of deposits from the public. In those days, wealthy persons used to deposit their money in banks in lieu of interest. The second function was give short and long-term loans at interest. The third was to issue various types of hundis (bills of exchange) and realise their values, and to participate in the sale and purchase of imported and exported goods. Along with these, banks used to take part in the exchange of coins. In the pre-Plassey period, the House of Jagat Seth was the foremost banking institution of Bengal. The House of Jagat Seth was connected with deposit banking and credit banking, but they did not issue notes. This house may be compared with Germany’s ‘Phutzer ‘and Holland’s ‘Trip’ families.
It should be mentioned that the Jagat Seths belonged to the Marwari community. They came to Bengal and set up their business house (kothi), and by participating in the exchange of currencies and acquiring control of the mint, earned enormous wealth. They performed the same functions for the government of the Nawab that are now done by the State Bank of India for the Government of India. But the real banking practice in the modern sense, i.e. setting up note-issuing banks, was started in Bengal by the English East India Company. The English set up three banks mainly for the purpose of managing their capital: (1) The Bank of Hindustan, set up in 1770, (2) The General Bank of India, set up in 1776, and (3) The Bengal Bank, set up in 1784. The activities of these banks were confined to Kolkata and their chief function was to finance the external trade of the East India Company. In 1809, the Bank of Bengal was formed, which had its precursor in the Bank of Calcutta (1806). These banks, besides accepting deposits and giving credits, issued notes of their own.
Being a rural person by birth and early upbringing, he was familiar with the economic conditions of the countryside. While living in Rangpur, he began to reflect on how to improve the lot of the peasantry and to bring prosperity to the village-centred economy. The changes brought about by the English-instituted land revenue system were not at all beneficial to the villages. This system gave rise to changes that did great harm to the rural people. The creativity of the villages was hampered, and they were made dependent on the outside world. The high rates of revenue extraction rendered the villagers helpless and destitute. To liberate them from this condition, Panchanan Barma set up the ‘Kshatriya Bank’.Its objective was to free the peasantry from the clutches of the landowners and moneylenders and to provide them with the opportunity to build up a bright future by providing them with easy credit facilities. The new method he applied is today called micro-finance, but earlier known as micro-credit. This micro-credit system conducted through the Kshatriya Bank benefited many peasants. But he also understood that provision of easy credit through the Kshatriya Bank would not be enough to free the peasantry from usurious exploitation. For this reason he sought to establish the rights of peasants through land reform laws.
The Montagu-Chemsford reforms reduced the amount of taxes and the Government took the initiative to reform the Bengal Tenancy Act. Hitherto, zamindars could evict peasants from land at will. For this reason, Panchanan Barma spoke of land reform measures. It is necessary to mention that in 1928, the Hindu and Muslim members of the Bengal Legislative Council voted in favour of tenants. Panchanan Barma was on the drafting committee of the amendment of the Bengal Tenancy Act of 1885. Naturally, he played a prominent part in having the Bengal Tenancy Amendment Act passed in the Bengal Legislative Council. This Act benefited the poor peasants of villages.
As far as the ideas on rural development are concerned, Panchanan Barma has a specific similarity with Rabindranath Tagore, although Tagore preferred the term ‘rural reconstruction’ to rural development. His opinion was that there was a collective strength in the villages, which had enabled the villages to sustain themselves for more than 2500 years. In order to use this strength effectively, Tagore advocated the formation of cooperatives or groups.
Under the leadership of Panchanan Barma, well-coordinated clusters of villages (gram mandali) grew up in Rangpur, and the number of such clusters exceeded 300. The Kshatriya Bank’s impact on these clusters was very much discernible. Here too one can find a similarity between Tagore and Panchanan Barma. In Tagore’s opinion, there was no alternative to the release of the energy of villager’s latent in themselves, and that all the villages of the country were to be reconstructed in such a way that they would be able to meet all their needs.
One specific and noteworthy achievement of the Kshatriya Bank was that was that when, under the impact of world-widedepression, the banks of Bengal were closing their shutters one of one, the Kshatriya Bank maintained its reputation in extending easy credit facilities to poor peasants. Moreover, during the period of depression, the Kshatriya Bank’s transactions amounted to about two lakhs of rupees (not less than forty millions at the current price level).The present government has taken various measures to link villagers, including workers and peasants, with the banking system. For example, it is necessary to integrate them with the mainstream of the national economy through payments wages for the N.R.E.G. P, grants under the Indira AbasYojana, old age pensions etc. Panchanan Barma realized this incontestable truth as early as ninety years ago.
The Kshatriya Bank, set up with the objective of reforming the Rajbansi society, was able to improve the economic conditions of the Rajbansi- dominated rural areas. In the beginning, it was the Rajbansis who mostly availed themselves of this service. But later on, the benefits flowed to the peasants of the greater part of undivided North Bengal. Adopting Panchanan Barma’s concept of micro-credit and applying it widely, Mahammad Unus could give it worldwide publicity. This ‘micro-credit’ is now known as ‘micro-finance’, which Panchanan Barma had much earlier applied in field of rural development by forming clusters of villages. Here it is worthwhile to mention that in the native princely state of Coochbiher, where Rajbansis lived in large numbers; there was no conflict between the jotedars and the peasantry, because the landowning zotedars themselves were peasants. This was a phenomenon just opposite to the Permanent Settlement.
The remarkable role played by Panchanan Barma, the social reformer, in the task of economic reforms of the Rajbanshi society may be outlined as follows:
i) After becoming a member of Bengal Legislative Council, he first took the initiative in amending the Bengal Tenancy Act. He was one of the foremost members of the Draft Committee that was formed in consequence of this initiative.
ii) Before the formation of this committee, actual tenants had no rights, and they could be evicted by the zamindars at will. But when in 1927, the Tenancy Act was amended following the recommendation of this committee; the interests of tenants were protected.
iii) He was a member of the Board of Economic Enquiry that was formed in order to save the peasantry from the impact of the world depression of 1930-31.
iv) He formed the Kshatriya Bank for providing easy credit to peasants who were ruthlessly exploited by usurious moneylenders.
v) In order to protect the peasantry and to make them self-reliant, a bill was prepared in 1934 for promulgating a law declaring moratorium on peasants’ debt. The bill was sent to the Select Committee and Panchanan Barma was selected a member of it. Besides, the criticized the Ijaradari system then prevalent in the native state of Cooch-behar and put forward a proposal for its amendment.
vi) It was owing to his initiative that arrangements were made in this native state for revision of revenue rates. By the aforementioned activities, Panchanan Barma played an important role in the economic reform of Rajabanshis and of the peasantry as a whole.