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Banking, Trade and Commerce

HISTORY OF INDIGENOUS BANKING : The indigenous bankers who belonged to different communities lent money on the security of jewels and also on promissory notes. They functioned both in urban and rural areas. Most of the loans were short-term, repayable with interest after the harvest of the crops, either in one or more installments. The conditions were informal in that the loans could be obtained at any time and without any security depending on the confidence and the relationship of the lender with the borrower.

Nevertheless, money-lenders and pawnbrokers have a great hold over agriculturists and others, and their success lies in their intimate knowledge of their customers. Besides the terms are mostly informal and there is no hard and fast rule about the security or interest.

MONT-DE-PIETE: Called as Pawn office, set up by the French, by means of an ordiance dated 1 May 1827 initially at Pondicherry and setup similar institution at Karaikal under the arretes of 29 July, 1907. The Institution was provided with necessary funds from the reserve fund. It rendered great service to the needy sections of the population and notably the small agriculturists by providing them advances at reasonable rate of interest. The institution gave loans from Rs.3 to Rs.3,000 on the security of jewels and silver articles depending on the value of the security, the amount of loan ranging from 1/4th to 4/5th of the total value of gold ornaments or silver articles, as the case may be. The rate of interest fixed at 8 percent per year. As the institutions had only limited resources at their disposal, they were unable to meet the credit requirements of the people.

PONDICHERRY POWNBROKERS ACT based on the Madras Pawnbrokers Act, 1943 was passed in 1966 with slight modifications to meet the local requirements and brought into force on 15 October, 1966. The USURIOUS LOANS ACT, 1918 (Central Act) extended to this Territory in 1966 was brought into force on 1 September 1970. THE PONDICHERRY MONEY-LENDERS ACT, 1970 (26 of 1970) which sought to regulate and control the business of money-lending by introducing the system of registration was assented to on 19 August 1970 and made applicable to Karaikal region with effect from 1st October, 1970. The Tahsildars and Deputy Tahsildars function as Inspectors under the Acts with power to inspect the accounts of the licensees periodically and to take legal action against offenders.

THE INDIAN BANK SURVEY IN 1970, revealed that there was a good cause for establishing several branches of COMMERCIAL BANKS in the Territory. Moreover, it would be to the mutual benefit of the banks and the public if commercial banks could take to small lending's against mortgage of jewels and utensil in a big way. This would free the people from the the exploitation of pawnbrokers and it would also promote the banking habit among the lower strata of people.


JOINT STOCK BANKS:  With  the  extension of the BANKING COMPANIES ACT, 1949  and  the FOREIGN EXCHANGE  REGUALTION ACT, 1947, to Pondicherry in 1954 the  stage was set for Indian Banks to open their branches in this Territory.

A branch of UNITED COMMERCIAL BANK was opened in Karaikal on  10 August, 1973. The bank extends every kind of banking facility to the public.

As on 31 December 1975, three branches of the INDIAN OVERSEAS BANK were in operation in Karaikal region viz. Karaikal, Thirunallar, and Thirumalairajanpattinam.

As  on  31-12-1975, THE STATE BANK OF INDIA, INDIAN BANK,  CANARA BANK are  also having branches in Karaikal.

Besides these banks, The Lakshmi Vilas Bank Ltd.  has also opened its branch.   All the  branches  of  the banks  are  having  Savings  Account, Recurring  Deposit Account, Current Account, Term  Deposit,  Cummulative Deposit Schemes, etc.

Most  of  the  banks are having facilities of  foreign  exchange, agricultural  finance. Farmers  were   advanced  liberal  loans   for the purchase  of  pump-sets, tractors, etc.,  and  towards  crop  loans. Proposals  for  loan  from small and big industries, professional  men, self-employed  persons, etc.  are entertained.  Village Adoption  Scheme, Lead Bank  Scheme sponsored by the Reserve Bank of India  for provision of comprehensive  credit to small farmers, and Consumer Credit-Installment Loan Scheme  are  provided  by these banks.  Assists  import  and  export trade, deals  pledge of gold ornaments, etc.  Travellers Cheques, Letters of introduction are available.   Credit  Card   System,  and  ATM   are introduced in some banks. Housing Loans Schemes are now familarising in the Banks.

The  Depositors  are  mostly  middle  class  businessmen, salaried persons and French  pensioners, educational and  religious  institutions apart from  the Government transactions and deposits, etc.  Most of  the depositors, belong to the low income group as well as the salaried middle income group  besides  small organisations. Agriculturists  in  selected villagers.

The public have not in general taken to the banking habit.  While the public  have shown great enthusiasm to avail of loan facilities  from the banks,  they have not shown the same degree of enthusiasm to  deposit their surplus funds in the banks.         However,  most  of the NRIs are interested to settle in  Karaikal region and  the  NRI deposits are now filling the Bank deposits  more than the expectations.

CO-OPERATIVE  CREDIT  BANKS  and  SOCIETIES  are  also  meet  the long term / short  term  credit  requirements of the  public / ryots  in  this region.PRIVATE  BANKS,  such as the  Kumbakonam  parspara  sagayanithi limited, etc, are also functioning.

COOPERATIVE CREDIT SOCIETIES AND BANKS :  The  small  farmers  and tenant holders badly needed  finance  to carry on  their agricultural operations.  They also had to withstand  the effects of  droughts  and  floods from time to time.  All these factors placed the  small  farmers at the mercy of the money-lenders.   Thus the introduction  of cooperative institutions in the Territory came as one  of the salutary results  of merger.  The cooperative credit system  in  the Territory  is  built upon a two-tier structure i.e., the  Apex  Financing Agency at the top and the credit societies at the primary level.

THE   PONDICHERRY  STATE  COOPERATIVE   BANK  LIMITED  was duly registered  on  10  October 1958.  The bank started functioning  from  30th  October 1958,  which  has jurisdiction over the entire Territory  is  the Apex Cooperative sector channeling the funds received from the  Reserve Bank of India  to  the affiliated credit societies at a  lower  rate  of interest.   It provides short term and medium term agricultural loans  to the agriculturists  through  its  affiliated societies.   The  bank also issues medium-term loans for non-agricultural purposes to public servants through the affiliated staff cooperative societies to a limited extent.



LIFE INSURANCE : After  the  formation of LIFE INSURANCE CORPORATION OF INDIA  in September,  1956,  the  Servicing  Branch   of  Nagapattinam  under   the Controlling  Divisional  Office at Thanjavur, Karaikal has been  provided all services by the LIC.  However, a separate servicing branch has also been opened  some  years ago in Karaikal which is more  helpful  to  the people of Karaikal.

SSS:   The  Salary  Savings   Scheme  was  introduced  benefiting government employees.  The Salary Savings Scheme is not only  applicable to government servants but also to the employees of mills, local bodies, etc.

UTGEIS:  A special scheme for the Union Territory Govt.  Employees Insurance Scheme has been introduced and functioning for the welfare  of Govt.  employees.

LIC  introduced Income tax benefit schemes which are familiar  to the Medium and High Income Group people.

Housing  Scheme is now very popular.  Under this scheme  purchase of plots, construction  of new house building, purchase of  ready  built building,  re- constructing of old building, etc.  schemes are  available. Special and attractive Schemes for NRI also available.

GENERAL INSURANCE : General  insurance  companies operated in various parts of  India for the purpose  fire and transit insurance for house and other buildings have not  branches in Karaikal. However, the NEW INDIA ASSURANCE COMPANY having its branch and provide service on motor insurances for the various fleet owners and individual vehicle owners among government officials and general public.


Pondicherry administration initiated several measures to speed up the industrial development of the Karaikal region under the SINGLE WINDOW SYSTEM. The establishment  of an INDUSTRIAL ESTATES to  encourage  the growth of  small scale industries.  Providing financial aid to industries should be  passed  as  early as possible  for  the  purchase  of  land, construction   of  factory  building,  purchase of  tools,   equipment, machinery,  and  also provided for the payment of a subsidy on  interest. An act also  passed  in  this  regard  called  PONDICHERRY STATE AID  TO INDUSTRIES ACT, 1970.

THE  INDUSTRIAL  DEVELOPMENT  BANK OF INDIA  AND  THE INDUSTRIAL FINANCE CORPORATION  OF INDIA, extended refinance facility to  industrial units in the  Territory.   Also offer a lower rate of  interest, longer moratorium  and  amortisation periods  and  accept  a  lower  margin  of security.

PONDICHERRY  INDUSTRIAL  PROMOTION,  DEVELOPMENT  AND INVESTMENT CORPORATION  LIMITED  (PIPDIC):  This Corporation was incorporated  under the Companies  Act, 1956, on 17 April 1974.  Its objective is to work for the industrial development of the Territory.  The Corporation is managed by a Board  of  Directors appointed  by  the  Lieutenant-Governor.   The implementation  of  the  Central Government's outright grant  or  Capital Subsidy Scheme  was  handed  over  to   this Corporation.   Schemes  for financial assistance to small, medium and large-scale industries as well as technocrats have also been formulated by the Corporation.

OUTRIGHT  GRANT:   Following the declaration of the entire  Union territory   as an industrially  backward   area  in  September,   1971, entrepreneurs  became eligible for certain concessions under the  Central Government's outright grant or subsidy scheme.

Arrangements  were  made  in to register  small-scale industrial units with  the Directorate General of Supplies and Disposal through  the National Small  Industries Corporation  and  Small  Industries  Service Institute in order to help them market their products.

CONSULTANCY SERVICE:  Services of experts of the various Regional Productivity Councils  of  the National Productivity Council  and  other Organisations  which  offer  consultancy services are made  available  to small-scale units in the Territory. 

RAW  MATERIAL DEPOT:  This helps secure priority allocations  for industrial and scarce materials.

SALES  TAX EXEMPTION/CONCESSION:  The Govt.  gives exemption from the payment  of  sales tax and further reduced by half the central  sales tax payable in respect  of  all   goods  manufactured  by   small-scale industries under certain conditions.

REMISSION OF STAMP DUTY :  This Administration have also exempted all types  of industries from payment of stamp duty for deeds executed in favour of the PIPDIC.

EXEMPTION OF REGISTRATION  FEE:    Small-scale  industries   in Pondicherry are exempted  from the payment of  registration  fee  under certain conditions.

POWER  SUBSIDY:   The  administration had announced a  scheme  of power subsidy   for  low  tension  and   high  tension  power   consuming industries.

MISCELLANEOUS  CONCESSIONS:   Facilities  like  hire-purchase  of machineries, Price preference, Industrial tour for getting technological advances.


In  Karaikal  region,  the  functions for  the  NATIONAL  SAVINGS ORGANISATION,  are  performed  by   the  Assistant  Regional   Director, Trichirapalli, and the District Savings Officer, Nagapattinam.

STATE  ADVISORY  BOARD:   Constituted  to advise  and  guide  the administration to popularise the small savings with the Chief  Secretary as Chairman and the Finance Secretary as Vice-Chairman.

OPERATION  SCHEMES:  In Karaikal region all the Sub-Post Offices, and Branch Offices render the savings bank facilities.

Fixed  Deposit  Scheme, The Cumulative Term Deposit Scheme,  Cash Certificates are introduced for the inducement of Small Savings.


The  chit fund locally known as ceetu serves both as a profitable avenue of investments and a convenient method of small savings.

To  have effective control over the functioning of the chit  fund companies  and  to safeguard  the  interests  of  the  subscribers,  the Pondicherry  Chit Funds Act, 1966 was passed .  This Act, which  provided for measures to regulate chit funds, was brought into force on 1st  August, 1977.

In  Karaikal,  The Mayavaram Chit fund ltd, Visalam Chits,  etc., are functioning. In addition to the chit fund companies mentioned above, there are also some  vessel, furniture, Gold ornaments, and other merchants who run chits.  The  difference is that the prize winner gets the prize in  kind of terms  of the agreement and once having won the prize, the  subscriber is not required  to pay his subscription any further.  The Chit Funds Act does not cover this kind of chits.


With  merger,  THE INDIAN COINAGE ACT, 1906, THE RESERVE BANK  OF INDIA ACT,1934  AND  THE CURRENCY ORDIANCE OF 1940 were extended  to  the Territory with effect from 1 November, 1954.  With the extension of these Acts, Indian coins, one rupee notes and bank notes issued by the Reserve Bank of India formally became legal tender in the French establishments.

Foreign  currencies brought by the NRIs have also been  exchanged in the Selected branches of the Scheduled Banks.


EXPORT AND IMPORTS IN OLDEN DAYS: Rice  was lifted chiefly from Karaikal.  Pottery, ground-nut oil, oil, small  quantities  of  coconuts, tamarinds,  onions,  tannin, dyes, coconut oil,  chillies,  coriander and gingelli were also exported.   The export from Karaikal was about one-nith of the total sea-borne trade.

Imported   Petroleum  served  as  a  depot  for  the  surrounding districts.    Smaller  imports  included   wines,  spirits   and   other liquors,coal, cotton thread, jute bags and grains.  A large proportion of the import  trade was with the British Empire and a small proportion with France and the French possessions.

Gold  which  fetched a much higher price in India than in  French India was  taken to the frontier in larger quantities.  Gold and  Diamond were imported  through  official channels paying customs duty  which  was nominally  increased  subsequently to improve the revenues.   These  were smuggled  to  the  Indian  Union.   In  turn, more Indian  rupees  from Pondicherry  reached  Hong Kong and the Persian Gulf wherefrom  gold  was brought.

AFTER MERGER : The  Import  and Export Control Act, 1947 was extended  to  these establishments  with  effect  from 1 November, 1954.  Import  and  export licences were  granted  in accordance with the policy announced  by  the Indian Government from time to time on an all-India basis.

A  Special  Additional  Licensing Scheme was introduced  for  the first time  during the  January-June  1955 period.  The  main  items  of imports under  this  scheme were electrical instruments, motor  starters, house service  meters, betel-nuts, cloves, chemicals, drugs and medicines and other consumer items imported in terms of the quota system.

Presently,  the traders know the modern technique of trading method and at present  in Karaikal various kind of products such as,  ornaments, furniture,  CTV,  Fridge, Electrical and  Electronic  goods,  Medicines, Automobiles and its spares, Rubber Products, Plastic goods, Building materials,  Bakery, Sweets, Food-items, Household articles, etc. are selling in Karaikal.

This Administration also paved the way for increasing the Trading activities by conducting VANIGA VIZHA, etc.


The  system  of levying customs duty to regulate the movement  of goods across the borders was in force very early times.

With de facto merger a Collectorate of Customs and Central Excise started functioning with  headquarters  at Pondicherry.  At  Karaikal  a Central Excise  Range  in charge of an Inspector assisted by a sepoy  has been constituted.


Even though   some  other  marketable   centres  situated  in  the adjourning  Tamil Nadu State boundaries, Karaikal is the most  important for trading  activities because of having unique features in the field of cultural  and  literal society.  Having its administration which is  also helps between the consumers and the traders.


The  Pondicherry  Weights and Measures (Enforcement)  Rules  were brought into force with effect from 10 August 1968 replacing the  Madras Weights and Measures Rules till then in force.

The  Office  of the Assistant Controller of Weights and  Measures and Legal Metrology  was  formed with responsibility to  deal  with  all matters connected  with Weights  and  Measures   and  Excise  under  the Administrative control of the Revenue Development Department.


Karaikal  is having a good trade associations in various types of trading activities.  The Karaikal Chamber of Commerce has been established recent years ago and functioning smoothly.

About  trade  news,  some of the free issue  news-papers are guiding the consumers for shopping. Also, advertised through All India Radio (FM) channels, Local cable TVs etc.,