150 Years From The Banyan Tree

The story of the exchange and the people who shaped its growth: From wars and bomb explosion to speculators, reformers and wealth creators

- SACHIN P MAMPATTA

In some ways, the history of the BSE can be traced back to the speculative mania that gripped Mumbai (then Bombay) more than a decade before the exchange's founding. Among the key figures of that great bubble was Premchand Roychand, described as a "devout Jain, of fair complexion, lithe of limb and sweet of temper, of engaging manners and free from the pride of riches who had seen no more than thirty-four summers but who carried a most clever financial head on his shoulders." Roychand was involved with financial institutions like the Bank of Bombay and the Asiatic Bank. He had started out as a share broker at the age of 16 and by the 1860s was foremost among brokers who traded in shares at various locations in Mumbai, absent an exchange. This was a fortuitous time to be in the business. The East India Company's control over the country ended with the mutiny of 1857. The British crown was in direct control and there was free flow of capital into India without the barriers placed by the Company Raj. Tea and coffee plantations abounded, as did jute mills and coal mines. Then the American Civil War choked cotton supplies to Britain, which bought up cotton from India to fill the breach. The resulting flow of wealth into the country saw a surge in speculative activity in shares of newly formed enterprises and even derivative trading through a kind of forward contract called a time bargain.

Roychand helped funnel banking funds into the booming stock market, often with little room for prudence or caution.