The moneychangers (Şarrāfs) in

Mughal India

Najaf Haider
The Mughal exchange economy can be visualised as comprising twin circles of cash and credit.
In the first, transactions were conducted in currency money (metallic and non-metallic) consisting
of fresh imports and pre-existing stocks. In the second, payments were deferred to pre-fixed dates
using credit instruments. The circles of cash and credit grew in the sixteenth and seventeenth
centuries, possibly more in the latter. This paper is about a unique professional group, the ṣarrāfs,
whose members engaged themselves in both these circles. They were essentially assayers and
moneychangers who operated in the market or worked for a client (state, village community,
members of the ruling class, merchants), or carried out both functions at the same time. The
possession and handling of cash enabled them to diversify their operations, the most important
being banking. As bankers, the ṣarrāfs accepted deposits on interest, gave commercial and
consumption loans, and transferred money from one place or person to another through bills
of exchange (hundī) and book entries (giro). The ṣarrāfs facilitated the movement of money and
merchandise also by covering risks on payment of premium (inland, marine and credit insurance).

Keywords: Ṣarrāfs, Mughal India, banking, bills of exchange, insurance

Ṣarrāfs as Assayers and Moneychangers

As their Arabic name indicated, the principal function of ṣarrāfs in Mughal India
was to test (assay) and change money. The Mughal monetary system was multi-
metallic and the exchange of one type of coin for another was a popular practice
since customers had to pay for goods in the market in the same coin in which
the price was quoted. Shopkeepers were not generally expected to have enough
expertise to change money and this was the professional prerogative of the ṣarrāfs.
The ṣarrāfs assessed the weight and value of the coins for a small commission.
A qualitative system of assaying coins was common among the ṣarrāfs in India
based on the use of needles and touchstone.1
An early seventeenth century Dutch account furnishes similar information about
the profession of the ṣarrāfs of Gujarat as money-testers.2 It highlights the trust

1
  Abul Fazl, Ain i Akbari, 2 vols, ed. H. Blochmann, Bib. Indica, Calcutta, 1872–77, vol. 1, p. 14.
2
  ‘Johan Van Twist’s Description of India’, tr. W.H. Moreland, Journal of Indian History 16 (1937),
p. 73. The term ṣarrāf appears in the original account. See also Pieter van Dam, Beschryvinge van de
Oostindische Compagnie, 4 vols., 7 pts, eds. F. W. Stapel and C. W. T. van Boetzelar, ‘s-Gravenhage,
1927–54, II, iii, p. 102 (App. Vc).

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SAGE Los Angeles/London/New Delhi/Singapore/Washington DC/Melbourne
DOI: 10.1177/2348448919872286
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the market placed in the expertise of the ṣarrāfs in certifying standard weight and
fineness. If a coin was not found to be genuine or of the same value as certified by
them, the ṣarrāfs compensated the customer. Tavernier tells us that the ṣarrāfs of
Golconda sealed bags of coins after ascertaining their value and the ‘bags circulated
as sums of money without being opened throughout the year’.3 Paradoxically, the
ṣarrāfs both added to the transaction cost and reduced it.
Copper coins were the money of everyday transaction in Mughal India. Prices
and wages were paid in copper coins, and if anyone had a silver coin, it had to be
exchanged for small purchases quoted in copper.4 Such exchanges were undertaken
usually by the ṣarrāfs.5 According to a Mughal official report from Surat, the most
important port-city of Gujarat, dated 1661, there were moneychangers known for
dealing in small change (şarrāfān i khūrda farosh). The ṣarrāfs purchased freshly
minted copper coins (dāms) from merchants controlling the supply of Japanese
copper to the mint. The copper coins were sold to those who needed small change,
and the silver rupees obtained in the sale were invested in fresh cycles of copper–
silver exchange. The commission charged on the exchange constituted the ṣarrāf’s
profit.6 The customers of the ṣarrāfs included those Mughal officials at Surat who
supervised the repair of the imperial ship Ganj i Sawāī. The officials needed regular
supplies of copper dāms from the ṣarrāfs to pay the wages of carpenters and other
workers employed in the repair of the ship. A crisis of copper in Gujarat in c. 1660
disrupted the cycle of bi-metallic exchange when the copper merchants diverted the
supply of dāms from the mint to the areas where the coins fetched a higher price
in silver. As a result, the exchange rate of dāms rose against rupees adding extra
cost to the repair of the ship. The state intervened to restore the supply of dāms to
the local economy.7 In Ahmadabad, capital of the province of Gujarat, the ṣarrāfs
dealt with the shortage of copper by giving currency to a fiduciary coin of iron.
The Mughal administration, on its part, incentivised copper minting by abolish-
ing seigniorage.8 In Surat itself, the local administration prohibited the resale of
Japanese copper by a proclamation with drum roll throughout the city in order to
reserve the supply of the metal for the mint and the moneychangers.9

3
  Jean-Baptiste Tavernier, Les Six Voyages de Jean Baptiste Tavernier, en Turquie, en Perse, et Aux
Indes, 2 vols., Paris, 1679, II, p. 598.
4
  Najaf Haider, ‘Fractional and Non-Metallic Monies in Medieval India (1200–1800)’, in Small
Currencies Matter: Trade and Transactions in Early Modern East Asian Economies, eds. Jane Kate
Leonard and Ulrich Theobald, Leiden, 2015, pp. 86–107.
5
  Banarasidas, Ardhakathānak, ed., and tr., Mukund Lath, Jaipur, 1981, p. 262 (verse 504).
6
  Kristof Glamann, ‘The Dutch East India Company’s Trade in Japanese Copper, 1645–1736’,
Scandinavian Economic History Review 1 (1953), pp. 64–5.
7
  Administrative Order (parwana) of Raja Raghunath, Biblioteca Apostolica Vaticana, MS Persiano
33, unfoliated.
8
  Mirat i Ahmadi, I, p. 265.
9
  Winnicx to Maetsuycker, 2 June 1661, (ARA, VOC) OBP, 1236, ff. 649–50 cited in James Tracy,
‘Asian Despotism: Mughal Government as Seen from the Dutch East India Company Factory at Surat’,

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The Mughal state used the services of the ṣarrāfs in two ways. First as assay-
ers in the mint of the raw material supplied for minting as well as freshly minted
coins.10 Second, the ṣarrāfs assayed and changed money at the point of revenue
collection so that the state received its share without incurring loss.11

Ṣarrāfs as Mint Suppliers

Beyond internal exchanges, recoinage and remonetisation, the ṣarrāfs handled

foreign import of monetary metals meant for the mint. Due to India’s favourable
balance of trade, most merchants who exported commodities brought in return
foreign coins and raw metals (gold and silver bullion and copper). All this had to
be converted into Mughal coins for fresh purchases. In order to save time and avoid
dealing with mint officials, merchant-importers of foreign coins and metals sold
their consignments to ṣarrāfs.12 A passage in the commercial report of a French
factor gives us a sense of how the ṣarrāfs controlled the supply of silver bullion to
the mint after fixing the exchange rates of Spanish dollars imported from the New
World and Europe:13 Earlier, an English factor at Agra, made a similar complaint
about the ‘loss’ incurred on the sale of the reales of eight (dollars) on account
of the high fineness of the Mughal rupee and the commission charged by the
ṣarrāfs.14 Yet, merchants carried a wide variety of foreign currencies and bullion
to India because they knew that goods could be readily bought with cash obtained
from the mint or the money market. Around 1659, Francois Bernier sketched the

Journal of Early Modern History 3 (1999), p. 274. Also see English Factories in India (1618–1669),
Vol. for 1661–64, p. 113.
10
  Abul Fazl, Ain i Akbari, I, pp. 13–14. For the presence of ‘several shroffs’ inside the Surat
mint, see Factory Records, Surat, British Library, Series G/36, vol. 94, ff. 49b-50a. Also see Najaf
Haider, ‘Minting Technology in Mughal India’, Felicitas. Essays in Numismatics, Epigraphy &
History in Honour of Joe Cribb, eds. Shailendra Bhandare and Sanjay Garg (Mumbai, 2011),
pp. 179–81.
11
  Abul Fazl, Akbarnama, MS Add. 27,247, British Library, f. 332b; Shireen Moosvi, ‘Problems of
Mughal Revenue Administration. Todarmal’s Original Memorandum, March 1582’, in idem, People,
Taxation and Trade in Mughal India (Oxford, 2008), p. 171 (article X of the recommendations).
12
  Najaf Haider, ‘Precious Metal Flows and Currency circulation in the Mughal Empire’, Journal
of the Economic and Social History of the Orient, Special Issue ‘Money in the Orient’ (Leiden, June
1996), pp. 298–335.
13
  Georges Roques, La maniere de negotier dans Les Indes Orientalles dedice a mes Chers amis
Et Confreres Les Engages de la Royalle Compagnye de France, Bibliotheque Nationale, MS Fonds
Francais 14614, ff. 245–6. The account, meant to instruct French merchants on how best to trade in
the Mughal Empire, has a detailed, albeit highly sceptical, description of ṣarrāfs and their artifices.
See Ruqaiya Husain, ‘Banking, Bills and Insurance: Roques’ Report of the Ṣarrāf’s Practices and
Devices’, Proceedings of the Indian History Congress 63 (2002), pp. 375–76, where the passage is
quoted in translation.
14
  Letters Received by the East India Company from its Servants in the East, 1602–17, vol. 6, eds.
Charles Danvers and W. Foster, London, 1902, p. 193.

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complex route taken by world bullion in search of merchandise with Mughal India
at the centre.15

State Monopoly, Mint Supplies and the Ṣarrāfs

With regular profits assured from assaying, money changing and bullion sales,
the ṣarrāf was the master of the money market. However, from the middle of the
seventeenth century, Mughal imperial and provincial officials could also claim
a share in profits from the buoyant bullion business in the port cities by creating
monopolies in what might otherwise have been a free market.16
The first phase of the monopoly began towards the end of Shahjahan’s reign
(c. 1658) with the sale of exclusive rights to coin money at the mint. According to
one report, at least 300 ṣarrāfs bought these rights by 1660.17 As one would expect,
this was followed by new market prices for bullion and coins which the ‘mint’
ṣarrāfs were able to enforce with the help of the administration.18 Accordingly,
even at a fixed mint price, the market value of the bullion fell with an increase in
ṣarrāfs’ profits. The monopoly holders (‘mint ṣarrāfs) had little time to rejoice
in the new set up when they realised that the state was committed to creating its own
monopoly in the bullion market at their expense. In 1661, the port administrator
(mutasaddi) of Surat, Mustafa Khan, convinced the imperial administration that
there would be an additional gain to the exchequer of 100,000 rupees if annual
bullion sales to the mint were to be handled exclusively by the state.19 The new
policy was put into effect almost immediately in all parts of the empire and spelled
disaster both for the ṣarrāfs and merchant-suppliers.20 Ironically, with the virtual

15
  Bernier, Francois, Travels in the Mogul Empire AD 1656–1668, tr. Archibald Constable, 2nd edn.
rev. Vincent A. Smith, London, 1916, pp. 202–3. Bernier’s information and insights were reproduced by
Careri in The Indian Travels of Thevenot and Careri, ed. Surendra Nath Sen, New Delhi, 1949, pp. 241–2.
16
  The impulse for state monopoly, possibly a product of war finance, may have come from those
officials who held the customs and mint revenues of Mughal port cities in farms and who were not
always successful in meeting the high targets set for them in the bidding. See English Factories in
India, 1642–45, pp. 23–5 for the case of a port official who was only able to collect, in three years of
his administration of the ports of Surat, Cambay and Broach, 41 lakh mahmudis against the required
amount of 72 lakh. Also see W.H. Moreland, From Akbar to Aurangzeb. A Study in Indian Economic
History, London, 1923, pp. 250–1.
17
  H. W. van Santen, De Verenigde Oost Indische Compagnie in Gujarat en Hindustan, 1620–1660,
Leiden, 1982, p. 80.
18
  English Factories, 1655–60, p. 306. Under normal circumstances, the ṣarrāfs were themselves
capable of arbitrarily reducing the price of the merchant’s (importers’) bullion. However, this was
limited partly by the competitive price structure of the bullion market and partly by the fact that the
merchants could always appeal to the local administration over what they regarded as unjust dealing.
See Ibid., 1634–36, p. 225. Both the institutional checks were eliminated under the new arrangements.
19
  Van Santen, Verenigde Oost Indische Compagnie in Gujarat en Hindustan, p. 80.
20
  For the Bengal administration’s insistence on their right to buy the entire supply of bullion imported
by the English see English Factories, 1661–64, p. 395. For Sind, we have a statement from Tavernier
which refers to a similar situation prevailing there. (Travels in India, I, pp. 7–8)

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elimination of the middlemen, this would have meant the beginning of a real open-
coinage system, though at a cost the merchants were not prepared to bear. When it
came to the sale of their bullion, the English merchants of the Company summed up
the restrictive nature of the monopoly and its impact on the ṣarrāfs in a letter sent
from Surat in the very first year:21 The raison d’être of the policy and its immedi-
ate impact on the trade of the region were revealed in another letter written two
years later:22
Such a restrictive practice had little chance of success in an open market for
two reasons: the strong commercial presence of the ṣarrāfs in all major cities,
and the lack of expertise on the part of the state officials in handling the complex
business of exchange. The initial protest of the ṣarrāfs to boycott the mint was
less effective. But once the merchants joined the fray, causing a disruption in the
caravan traffic from the hinterland and a fall in the customs revenue of Gujarat,23
the authorities were compelled to yield. The ṣarrāfs were back in business.24 Only
this time, they (‘taunksal shroff’) had to face their own kinsmen (private shroff)
who opted to operate in the open market against all odds.25 Even though there was
a total prohibition on sales of bullion to anyone except those working with the mint,
the free market ṣarrāfs managed to circumvent the monopoly by offering competi-
tive prices and using all possible means to deliver the proceeds to the merchants.26
This provides the context for the governor (subadar) of Gujarat ordering the mint
officials in 1689 AD to restrict the sale of uncoined gold and silver (tilā wa nuqra
ghair maskūk) solely to the mint.27 Subsequently, as a result of a complaint lodged
by Mīr Bāqar, the superintendent of the Ahmadabad mint, an imperial order was
issued (1698) that, to avoid loss of revenue, no one be allowed to refine (lit. melt)
gold and silver anywhere other than the mint.28

21
  English Factories, 1661–64, p. 22.
22
  Ibid., pp. 76–7.
23
  Ibid.; Van Santen, Verenigde Oost Indische Compagnie in Gujarat en Hindustan, p. 80.
24
  English Factories, 1661–64, p. 202; Factory Records, Surat, British Library, Series G/36,
vol. 3, ff. 38, 117; 105, f. 132a; Factory Records, Miscellaneous, British Library, Series G/40, vol. 2,
ff. 117, 124–5, 161.
25
  For the mint authorities favourably disposed towards the taksāl [mint] ṣarrāfs see Factory
Records, Surat, British Library, Series G/36, vol. 5, ff. 179b, 182b–184a; Original Correspondence,
British Library, Series E/3, Letter number 6436, ff. 135a–b, 272a.
26
  In 1672, whatever bullion entered the Surat customs house had to be sold to a taksāl ṣarrāf who
gave low rates as compared to the ‘private’ ṣarrāf. Some merchants, in order to avoid selling their
bullion at the official rate, ‘paid the custom privately to the officials’. Factory Records, Miscellaneous,
British Library, Series G/40, vol. 2, f. 161. This was done apparently to keep the sale of the bullion
undetected. Also see English Factories in India, New Series (1670–84), 4 vols. ed. Charles Fawcett,
Oxford, 1936–54, III, p. 240, p. 270. The agent of the French Company, Roques, had to offer a similar
advice for his fellow merchants (La maniere de negotier, f. 248).
27
  Ali Muhammad Khan, Mirat i Ahmadi, 2 vols. and Supplement, ed. Syed Nawab Ali, Baroda,
1927–30, vol. I, p. 304.
28
  Ibid., p. 340.

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The state control of the supply of bullion to the mint, through a bunch of listed
ṣarrāfs, continued as long as the state was strong enough to regulate the market
through its various apparatuses. With the decline in state power in the early parts of
the eighteenth century, the ṣarrāfs began to retake control of their business as in the
pre-monopoly years. Now, the mint was apparently thrown open to all the ṣarrāfs
and bullion merchants who could bring supplies as and when they wanted. The mint
administration still had a regular supplier of their own—mahājan i muqarrarī—
but he had to compete with the rest even though he enjoyed concessions in the
payment of seigniorage dues.29

Ṣarrāfs as Bankers and Dealers of Bills of Exchange (hundis)

Banking in Mughal India involved receiving deposits and lending money by

ṣarrāfs on interest.30 The loans were generally given by the ṣarrāfs to commodity
merchants but consumption loans too were advanced to creditworthy members of
society. The English and Dutch factories of the two companies in India took loans
on interest from ṣarrāfs to tide over the shortage of cash during high seasons.31
Roques gives us a long description of the network of loan transactions involving
commodity merchants, ṣarrāfs and brokers.32
Roques’ account highlights, among other aspects of commercial usury, the prac-
tice of charging compound interest. Short-term loans allowed quick decisions to be
taken on the employment of reserve capital for maximum gain.33 Extensions were
granted on the basis of renewed contracts for the lenders to compound interest.34
A shorter loan contract also gave the merchant the option of paying his debts just

29
  Anonymous, Kaghazat i Mutafarriqa, British Library, MS Add. 6586, ff. 57a–59b; Hidayatullah
Bihari, Hidāyat ul Qawā‘id, Maulana Azad Library, Aligarh, MS Abdus Salam Collection 379/149,
ff. 37a–39a.
30
  Irfan Habib, ‘Banking in Mughal India’, Contributions to Indian Economic History, ed. Tapan
Raychaudhuri, Calcutta, 1960, pp. 1–20; idem, ‘Usury in Medieval India’, Comparative Studies in
Society and History 6 (1964), pp. 393–419.
31
  Letters Received, V, pp. 86–7; Nicholas Withington, Early Travels in India, 1583–1619, ed. William
Foster, London, 1921, pp. 223–4, 228; British Library, Factory Records, Surat, Series G/36, vol. 3, ff.
73, 77; Van Santen, Verenigde Oost Indische Compagnie in Gujarat en Hindustan, pp. 226–7 (Bijlage
5); Om Prakash, ‘Ṣarrāfs, Financial Intermediation and Credit Network in Mughal India’ in Money,
Coins and Commerce: Essays in the Monetary History of Asia and Europe (From Antiquity to Modern
Times), ed. E. Van Cauwenberghe, Leuven, 1991, pp. 476–77.
32
  Roques, La maniere de negotier, ff. 223–5.
33
  The ṣarrāfs often kept their capital in reserve to pay incoming bills of exchange. English Factories,
1646–50, p. 64.
34
  British Library, Oxenden Papers, Add. MS 40696, ff. 56b, 57b, 58b; English Factories, 1646–59,
p. 130.

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after the sale of goods.35 If a loan had to be contracted for a longer duration, the
interest charged on it was slightly higher than the monthly rate.36
The ṣarrāfs, as bankers, accepted deposits from individuals, merchants and state
officials who had cash to put out on interest. A classic description of the practice of
bankers accepting cash deposits from customers comes from the letter of an English
factory sent from Agra in 1645, a time when the city was losing its status as the
capital of the Mughal empire to an emerging Shahjahanabad (Delhi):

Those that are great monied men in the towne, and live only upon interest receive
from the sheroffs [ṣarrāfs] no more than 5/8 per cent per month. The sheroffs
dispose it of to others from 1 to 2.5 per cent...Now when the sheroff (for lucre)
hath disposed of great sommes to persons of qualities at great rates, not suddenly
to be called in to serve his occasions, then begin his creditours (as in other parts
of the world) like sheepe one to runn over the neck of another, and quite stifle
his reputacion. Thus...hath two famous sheroffs bynn served within a month,
one of which failing for above three lack of rupees, diverse men have lost great
somes and others totally undone thereby; which hath caused men of late to bee
very timerous of putting their monies into sheroffs hands.37

This interesting example is of deposits payable on demand held by the Agra

ṣarrāfs from the wealthy people of the city.38 The amount was then lent out at
higher rates of interest to creditworthy clients. The difference between rates paid
on deposits (0.625 per cent per month) and loans (1 to 2.5 per cent) made up the
profit of the banker. Since the borrowers had taken up money for a fixed duration
not to be returned at once, when the depositors decided to demand their money
back, the ṣarrāfs had no choice but to declare bankruptcy. The depositors lost their
money and the ṣarrāfs their reputation.39
In addition to individual capital, the cash reserves of the state were also
sometimes put on deposit with the ṣarrāfs. In 1623, the men of prince Shahjahan
ordered the ṣarrāfs of Ahmadabad, to remit a sum of money from the provincial

35
  Letter Book, British Library, Series E/3, vol. 7, ff. 1a-b; English Factories, 1651–54, pp. 109–10.
36
  Francisco Pelsaert, Remonstrantie, tr. W. H. Moreland and P. Geyl, Jahangir’s India, Cambridge,
1925, p. 42.
37
  English Factories, 1642–45, p. 303; Irfan Habib, ‘Merchant Communities in Precolonial India’,
in The Rise of Merchant Empires, Long-Distance Trade in the Early Modern World 1350–1750, ed.
James D. Tracy, Cambridge, 1990, p. 392.
38
  The wealthiest of Agra were described as living mainly on lending money on interest. Pelsaert,
Remonstrantie, pp. 28–9.
39
  Bankruptcies were rare in Mughal India, as noted by another English merchant, because they
were considered socially disgraceful, and there were ‘stricter lawes to binde men to honest performance’
of their business than in England. Richard Boothby, A True Declaration of the Intollerable Wrongs
done to R. B. Merchant of India by two lewd servants to the Honorable East India Company, London,
1644, p. 51.

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treasury (khazāna) of Gujarat to Mandu, where the prince was camping. The order
caused a scarcity of money in Ahmadabad, which suggests that money was bodily
transported to Mandu.40 But when hundis were used for transfer, the result could
be different. Just a couple of years earlier, the governor of Patna, Muqarrab Khan,
delivered cash to the ṣarrāfs to be transferred by hundis to Agra; and money then
became plentiful in Patna.41
The ṣarrāfs accepted cash deposits against bills of exchange (hundi) given
to those who wished to transfer money from one place or person to another.42
Merchants, travellers and money-users, in order to avoid the risks of transportation,
deposited cash with ṣarrāfs in exchange for a hundi.43 Often, the hundi was used
for remittance with money changing. In the business of buying foreign species
from merchant-importers, such as dollars, ducats, laris, abbasis and kobans, the
ṣarrāfs made it attractive for the seller to accept payment in hundis drawn upon
the places where goods had to be bought. The agents and correspondents of ṣarrāfs
redeemed the hundis in Mughal currencies. The inland remittance of state treasury
from the port of Surat, which had a customs house accepting foreign currencies,
also involved conversion of foreign and regional monies into Mughal rupees.44
The hundi brought cash into the hands of the ṣarrāfs with commission on the
transaction. Although large sums of money of the Mughal state were usually trans-
ferred physically under heavy escorts, as in the case of the prince’s ‘treasure’ sent
from Ahmadabad to Mandu, small funds were remitted using ṣarrāf’s hundis.45 At
the district (pargana) level, the revenue collector (karori) was expected to remit
money to the treasury by hundi.46
As bankers, the ṣarrāfs effected book transfer (giro) by maintaining accounts
of their clients in which credit and debit entries were made. Depositors often

40
  The English factory at Ahmadabad reported that ‘this place affordinge nott mony to supply us, by
reasonn the Prince hath commanded his Cassanna to be transported to Mando by the sheraffes of this
place, which hath this many dayes caused a greatte scarcitye of mony.’ English Factories, 1622–23,
p. 181.
41
  Ibid., 1618–21, p. 236.
42
  Irfan Habib, ‘The System of Bills of Exchange (Hundis) in the Mughal Empire’, Proceedings of
the Indian History Congress, 35 Session, Muzaffarpur, 1972, pp. 290–303.
43
  ‘These means of remittance are used largely by merchants and their agents, when (as often happens)
the roads are unsafe for travellers with money, and merchants require funds at this place or that’.
Geleynssen de Jongh, De Remonstrantie van W. Geleynssen de Jongh, ed. W. Caland (‘s-Gravenhage,
1929), p. 79. Cf. Habib, ‘The System of Bills of Exchange’, pp. 290–91.
44
  Surat Documents, Supplement Persan 482, Bibliotheque Nationale, Paris, ff. 61a, 62b, 67b. The
port official, Masīḥuzzamān, received orders to take ṣarrāfs’ hundis in rupees drawn upon Agra or
the imperial camp.
45
  The imperial treasury was transported from Agra in carts to the newly built capital Shahjahanabad.
English Factories, 1646–50, p. 299. Also see Bhimsen, Tārīkh i Dilkushā, tr. Jadunath Sarkar, ed.
V. G. Khonrekar, Bombay, 1972, pp. 47–8, 177; Surat Documents, Suppl. Persan 482, f. 99a. For ṣarrāfs
transporting state resources, see Habib, ‘Banking in Mughal India’, p. 11.
46
  Munshi Nand Ram Kayasth Srivastavya, Siyāqnāma, Lucknow, 1879, p. 50.

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drew upon their bankers to make payments.47 A petty Mughal official, harried by
a dismissed Afghan servant to settle his outstanding salary claims, wrote a note
of payment (sanad) drawn on a ṣarrāf.48 Ledgers thus gave ṣarrāfs considerable
leverage in converting cash into credit. In order to avoid a short fall in their cash
holdings, the ṣarrāfs tended to delay the conversion of bills into cash. This they
did by opening a credit account in the name of the bearer or by making an entry
in the ledger against his name if he already had an account with them. This was
contrary to the usual practice of converting bill money into cash called anth.49
The ṣarrāf also created a system of book credit which dispensed with cash. If any
one decided to break the network of floating credit by demanding cash, he was
paid in coins of inferior value, called kachcha anth, even though his account was
kept in newly minted coins of higher value, called pakka anth.50 The difference
in the exchange values of old and new coins determined the rate of anth (Persian
ṣīgha i ānṭh. Hindi ankara) and it fluctuated with the availability of money in
the market. The bankers often raised the rate of anth, while encashing hundis,
when there was a shortage of money (kamī i zar i naqd). In 1714, the ṣarrāfs
of Ahmadabad increased the rate of anth deduction to a high percentage, action
that drew huge protests from the merchants and brought the market to the brink
of a crisis.51
Since all deferred payments were ultimately settled in cash, the limit of credit
could not be stretched beyond a point. The ṣarrāfs with a wider network of exchange
had to move cash between places by encouraging people to deposit where it was
scarce and withdraw where it was in plenty.52 The people who deposited cash
were those who purchased the ṣarrāfs’ hundis. The people who borrowed money
to finance their business issued their own hundis purchased (discounted) by the
ṣarrāfs at prices which included interest for the duration of payment. By altering
exchange rates of the two types of hundi—bill of remittance and bill of credit—the
ṣarrāf could induce merchants to give or take money and improve his cash balance
position. If this did not work, for a variety of reasons, the ṣarrāfs transported money

47
  British Library, Sloane MS 1910, f. 45b; Sikandar ibn Manjhū, Mirāt i Sikandarī, eds. S. C. Misra
and M. L. Rahman, Baroda, 1961, pp. 504–5. Tavernier tells us that the merchants buying diamonds
at Rammalkota drew bills on the ṣarrāfs, either at Rammalkota itself or at any other place, preferably
Surat, where the diamond sellers themselves bought commodities. Travels, II, pp. 47–8.
48
  Selected Waqai of the Deccan (1660–1671 A. D.), ed. Yusuf Hussain, Hyderabad, 1953, p. 10
(Persian text).
49
  H. H. Wilson, A Glossary of Revenue and Judicial Terms, London, 1855, s.v. ant.
50
  Original Correspondence, British Library, Series E/3, Letter number 2071, ff. 217a-b; English
Factories, 1651–54, pp. 80–1, pp. 105–6.
51
  Mirat i Ahmadi, vol. 1, pp. 410–1. Habib, ‘System of Bills of Exchange (Hundi)’, p. 299; Najaf
Haider, ‘A Holi Riot of 1714: Versions from Ahmadabad and Delhi’, Living Together Separately:
Cultural India in History and Politics, eds. Mushirul Hasan and Asim Roy, New Delhi, 2005,
p. 138.
52
  Habib, ‘System of Bills of Exchange (Hundi)’, p. 293. Also see foot note 38 above.

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 The moneychangers (Şarrāfs) in Mughal India / 155

physically to their agencies through couriers if the money happened to be in gold,

or by cart if large quantities of silver were required to be delivered.53

Mercantile Credit and Risk Sharing: Ṣarrāfs as Insurers

The ṣarrāfs organised mercantile credit to finance commodity trade and transfer
funds. Yet another important business practice of the ṣarrāfs was to provide
protection for goods in transit and underwrite risks of losses on capital advanced
in loans. Merchants living in medieval times knew only too well the dangers of
long distance trade and travel. In its most elementary form, risks could be shared
through in-partnership arrangements where two or more persons shared the profits
and risks in agreed proportions.54 In the Mughal empire, partnership (Hindi sājha;
Pers. shirkat) was a recognised form of financing and expanding a business venture
and the best means to share risks and profits.55 Similarly, it was not unusual for
merchants to acquire cash and goods from their principals to commence trading
under commenda, and gains from commenda (muzarbat) were common enough in
the seventeenth century to be considered legal and taxable by the Mughal state.56
In most partnerships, the management of risk was internal to the process of trad-
ing. In other words, it was the merchant who had to bear the losses resulting from
failures in transit or business. Similarly, the policy of entrusting capital to diverse

53
  Evidence for physical transfers comes from Roques, La maniere de negotier, ff. 227, 230. Husain,
‘Banking, Bills and Insurance’, p. 371. Bankers also issued bills of remittance on credit, i.e. without
asking for cash deposits, if they had surplus funds to dispose of at the other end. A Supplementary
Calendar of Documents in the India Office relating to India or to the Home Affairs of the East India
Company, 1600–1640, ed. William Foster, London, 1928, p. 120.
54
  Commenda was one such interface between loan and partnership where investing and travelling
merchants were brought together for capital management and the sharing of risks and profits. See,
Medieval Trade in the Mediterranean World, Illustrated Documents Translated with Introduction and
Notes, eds. Robert S. Lopez and Irving W. Raymond, New York, 1955, Docs. 83–86; Florence Adler,
Glossary of Medieval Terms of Business, Italian Series, 1200–1600, Cambridge, MA, 1934, p. 20, s.v.
Accomonda. References contained in the Jewish, Byzantine and Islamic legal texts suggest the existence
of such practices long before the various types of commenda arrangements appeared on the shores of
the Italian cities around the eleventh century. See Abraham L. Udovitch, ‘At the Origins of the Western
Commenda: Islam, Israel, Byzantium?’, Speculum 36 (1962), pp. 199–201; ‘Commercial Techniques
in Early Medieval Islamic Trade’, in Islam and the Trade of Asia, ed. D. S. Richards, Oxford, 1970,
pp. 42–3.
55
  For the experiences of Banarasidas as a partner (sajhi) of Dharamdās, son of an Oswal jeweller,
Jasū Sāh, see Ardhakathānak, p. 250 (verses 358–60). Partnership between brothers is illustrated by a
case of division of property brought before the administrator of Berar. Selected Waqai of the Deccan,
p. 83. For the exchange of letters between Gujarat merchants and their Lahore partners (shirka) see
Mutamid Khan, Iqbalnama i Jahangiri, eds. Abdul Hai and Ahmad Ali, Bib. Indica, 1865, vol. 3,
p. 301.
56
  For the factors (gumāshta) of sahūkārs trading on their behalf see Waqā’i ‘sarkār Ranthambhor
wa Ajmer, Aligarh transcript, no. 78, ff. 67, 293; Mirat i Ahmadi, vol. 1, p. 299 (Aurangzeb’s farman
on the collection of zakāt).

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factors travelling in different ships or caravans was a further step in dividing risks,
though it could never secure the total investment of a financier and often enhanced
the transaction costs due to increased supervision and accounting.57 Merchants’
concern for their capital and goods in the face of limited state protection, particu-
larly at sea, required a system of maximum security against risks and uncertainties.
The rise of insurance in Florence, Genoa and Venice in disguise in the thirteenth
century and then in its true form (third party covering risks on acceptance of pre-
mium) towards the end of the fourteenth century provided an effective solution
to this problem.58 Insurance as a viable method of securing trading interests was
firmly established in Bruges in the fifteenth century and in Antwerp, Amsterdam
and London in the sixteenth century.59

Inland and Marine Insurance

We get firm evidence of insurance in the Mughal empire only in the seventeenth
century but it is not clear whether this was a parallel development or inspired by
the trading methods of the Portuguese (earlier Genoese and Venetian) merchants
or of the two East India Companies.60 There is no reference to marine insurance
in Indian language records but a description of inland insurance appears in a
Mughal history written in Punjab in 1695. In this account, the excellence of India

57
  The English while sending money to Mokha to finance the coffee trade divided it into two ships,
Rahimi and Hurmuz Merchant, to minimise risks. British Library, Original Correspondence, Series
E/3, Letter number 5987. Similarly, Mokha merchants received instructions from their principals to
distribute the bullion among several ships for Surat. Ashin Das Gupta, ‘Gujarati Merchants and the
Red Sea Trade’, The Age of Partnership; Europeans in Asia Before Dominion, eds. Blair B. Kling and
M. N. Pearson, Hawaii, 1976; repr. in idem, Merchants of Maritime India, 1500–1800, Variorum, 1994,
pp. 157–58.
58
  Benjamin Z. Kedar, Merchants in Crisis-Genoese and Venetian Men of Affairs and the Fourteenth
Century Depression, Newhaven, 1976, pp. 10–1, pp. 123–4. The origin of marine insurance proper has
been vigorously debated by historians and legists. Arguments tracing its evolution from bottomry—
insurance loans (an inverse respondentia contract in which the travelling merchant would deposit a
sum with the person who shared the risks) and cambium (money-changing) carry conviction. For a
summary of these opinions see Giuseppe Stefani, Insurance in Venice from the Origin to the End of
the Serinissima, Venice, 1958, I, pp. 43, 58.
59
  Jeroen Puttevils and Marc Deloof, ‘Marketing and Pricing Risk in Marine Insiurance in Sixteenth
Century Antwerp’, The Journal of Economic History 77(3) (2017), pp. 796–837; Marine Insurance:
Origins and Institutions, 1300–1850, ed. A. B. Leonard, Basingstoke, 2016.
60
  In the thirteenth century, the trade between India and Iran became prosperous and Italian
merchants decided to establish a direct link with India and China using Tabriz as their headquarters.
Eliyahu Ashtor, Levant Trade in the Later Middle Ages, Princeton, 1983, p. 61. Venetian documents
reveal that, in an attempt to explore the opportunities for regular trade, merchants of Venice travelled
to Delhi to sell their goods to Muhammad Tughlaq. Robert Sabatino Lopez, ‘European Merchants
in the Medieval Indies: the Evidence of Commercial Documents’, Journal of Economic History
3 (1943), p. 174, pp. 177–9. For the presence of Genoese ships in the Indian Ocean, see Ashtor, Levant
Trade, pp. 61–2.

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is adduced, among other things, by the fact that merchants and travellers could
undertake their journey without fear of thieves and robbers.61 The author Sujān
Rāi described yet another marvellous phenomenon with reference to the work
of the ṣarrāfs. This was the practice of conveying ‘goods and merchandise and
other property and baggage’ safely (ba salamat) by the ṣarrāfs on payment of
a small fee. This practice was called bīma.62 A reference to a similar practice,
called ‘bemah’, and defined as ‘ensurance’, occurs in the correspondence of the
English factories at Surat in 1661: Here, the ṣarrāfs not only agreed to transport
specific varieties of textiles from Agra, for timely despatch to Europe, but also to
finance the whole venture for a fee.63 A still earlier reference to bīma for insurance
occurs in Prince Aurangzeb’s correspondence during 1653–54 in which receipt
is acknowledged of 109 pearls sent from Ahmadabad to Aurangabad ‘by way of
bīma’, obviously having been insured for their high value.64
These descriptions point to a system where insurance proper was joined to car-
riage and, in at least one case, to mercantile credit as well. The ṣarrāfs undertook
the actual conveyance of the merchant’s consignment and did not simply bear the
risks of loss of consignment. The charges, indeed shown with the cost of carriage,
suggested that the insurers were often the transporters themselves.65 In such arrange-
ments, insurance might be given not only against risks but also against incidence
of taxes and transport costs.
In picking up business of this kind, the ṣarrāfs either made use of or encroached
upon the territories of a class of people who specialised in undertaking payment
of customs dues as well as cartage in return for a consolidated sum. These men,
called adhvaya (Gujarati for carter), were employed by merchants to overcome
the twin problem of inland trade: availability of carriage and payment of transit
dues (rāhdārī), particularly when the goods traversed the territories of local chief-
tains.66 The adhvayas were essentially carriers (probably banjaras) who made

61
  Sujan Rai Bhandārī, Khulāṣat ut Tawārīkh, ed. Zafar Hasan, Delhi, 1918, pp. 9–10. Cf. Habib,
‘Merchant Communities in Precolonial India’, pp. 394–5.
62
  Khulāṣat ut Tawārīkh, p. 25. The two somewhat paradoxical statements point to the optimum level
of security needed for the insurers to operate.
63
  English Factories, 1661–64, p. 86. The term bima (insurance) is part of the modern Hindi-Urdu
vocabulary, the lexicographers linking it with Persian bīm or Sanskrit bhīmā (John T. Platts, A Dictionary
of Urdu, Classical Hindi and English, Oxford, 1884/reprint, New Delhi, 2000, p. 211, col. (a).
64
  Aurangzeb, Ādāb-i ‘Ālamgīrī, ed. Abdul Ghafur Chaudhuri, Lahore, 1971, Vol. I, p. 489. Shāista
Khān was the sender and Aurangzeb recipient.
65
  English Factories, 1618–21, pp. 268–9; 1668–69, p. 190; British Library, Factory Records, Surat,
Series G/36, vol. 102 A, f. 99.
66
  Peter Mundy, The Travels of Peter Mundy in Europe and Asia 1608–1667, 3 vols., ed. Richard
Carnac Temple, Hakluyt Society, 1914, vol. II, Travels in Asia 1628–34, p. 278, p. 291; British Library,
Factory Records, Surat, Series G/36, vol. 103, f. 7; vol. 84, ii, ff. 33–4; English Factories, 1618–21,
pp. 129, 344; 1646–50, p. 59. Also see British Library, Original Correspondence, Series E/3, Letter
Number 2239, where ‘adowyage or way customes of Agra Caffila’ is described.

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extra profit out of savings from tax payments while accepting a lump sum from
the merchants.67
Besides this specifically Indian form, there existed a more usual form of insur-
ance, which was devoid of any obligation on the part of the ṣarrāfs to convey the
goods themselves. This included insurance of goods and money in transit over
land and sea.68 From the moderate rates quoted for such transactions, it appears
that the charges could not possibly have covered the payment of customs dues
and cartage.
Given the medieval conditions of overland trade, insurance generally served
to protect trade against robbery.69 The Mughal state, like most medieval regimes,
considered maintenance of security on reviles a part of good government and held
officials responsible for any crimes committed on routes in their jurisdiction and
making them pay for the losses suffered by the victims.70 The appointment orders
of administrative officials mentioned as one of their duties that of securing high-
ways (muhafazat i shahrah) and, in the event of a theft, that of producing either
the culprits or the stolen goods.71 Reflecting on the apparent decline of law and
order in the last decades of the seventeenth century, Roques recollected the official
measures of protection in the past with some nostalgia.72
The insurers too employed all possible means to minimise the risks to which the
insured values were exposed. One rather unorthodox method was to seek protection

67
  In Mirat i Ahmadi, I, p. 261, adhvayas are described as a community of people earning their
livelihood by renting out carts (kiraya araba). The term is traced in M.B. Belsare, An Etymological
Gujarati English Dictionary, 3 ed., Ahmadabad, 1927, s.v. adhvayo. One adhvaya leader, Jaswant,
bore the title nāik usually taken by the banjāra headmen. British Library, Factory Records, Surat,
Series G/36, vol. 103, f. 7. In the nineteenth century too there were two separate professional groups
undertaking carriage for merchants, one of which in addition also insured the baggage. See C.A. Bayly,
Rulers, Townsmen and Bazaars North Indian Society in the Age of British Expansion, 1770–1870,
Cambridge, 1988, p. 415.
68
  British Library, Factory Records, Surat, Series G/36. vol. 3, f. 73; English Factories, 1637–41,
pp. 262, 288; English Factories (NS), III, p. 306.
69
  British Library, Factory Records, Surat, 5, f. 76. See Bayly, Rulers, Townsmen and Bazaars,
p. 416 for the link between robbery and insurance premium.
70
  Thevenot, The Indian Travels of Thevenot and Careri, ed. Surendra Nath Sen, New Delhi, 1949,
p. 28. The governor of the city of Mandu did not allow the caravan to depart without a written state-
ment absolving him of all charges should it be robbed. English Factories, 1618–21, p. 230. Also see
ibid., 1665–67, pp. 273–4. Cf. Irfan Habib, The Agrarian System of Mughal India (1556–1707), 3rd
edition, Delhi, 2014, pp. 75–6.
71
  Selected Documents of Aurangzeb’s Reign (1659–1706 A.D.), ed. Yusuf Hussain Khan, Hyderabad,
1958, p. 41 (appointment order of the deputy faujdar of Karnatik).
72
  Roques, La maniere de negotier, f. 242. Tavernier mentions the bureaucratic procedure followed
by the state for compensating merchants including examining the merchant’s testimony and a scrutiny
of his account books. Tavernier, Recueil de Plusieurs Relations et Traitez Singuliers et Curieux de J.
B. Tavernier, Paris, 1679, pp. 100–6.

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from the potential plunderers themselves and, although viewed as unethical, seems
to have worked to the benefit of all parties:73
The rates of insurance premium responded more to the conditions of security
than the time and distance required to transport goods from one place to another.
This is borne out by the rates quoted at Surat for Broach and Baroda, being 0.25
and 0.62 per cent of the value insured respectively for 1682. Even though Broach
was situated half way between Surat and Baroda, the rate for Baroda was more
than double as the journey was more dangerous and merchants were constantly
reminded of taking special precautions on this route.74 For Baroda too insurance
was given only when merchants agreed to take the longer route through Rajpipla.
This was because the insurers knew that the chieftain of this somewhat independent
principality always granted a safe passage on payment of transit money.75
A breakdown in the law and order of various regions in the empire, generally
preceded by political instability or a natural calamity, brought the business of insur-
ance to a standstill or induced substantial rise in the premium.76 In 1694, when the
widespread effect of drought, famine and plague led to food riots and high way
robberies, the situation posed a problem for both the merchants and insurers:

In Agra etc. the rabble in tumultous manner take corn by force where they can
find it without respect to govt. In Guzzarat near Broach have been the like
uproars and the Governor of Curkhurred (!) near Ahmadavad was killed on the
same account. The roads are so infested with robbers that we have altered our
resolution and ordered factoryes to insure all the Comp’s goods, and insurance
too is risen cent per cent.77

If inland insurance was a tricky affair, marine insurance was vastly more complex.
Here, too, the ṣarrāfs were major players and provided financial protection against
total loss or partial damage of sea going ships and cargoes. The evidence makes it
difficult to assess the participation in marine insurance of other mercantile groups,
Indian merchants and ship-owners. The references traced so far relate only to the
insurance of English or Dutch ships or their cargoes aboard English or Indian
vessels.78 A further limitation is that European sources do not contain the terms of
insurance to determine the nature of eventualities under which claims were made
and premiums fixed. It appears, however, that piracy, wreckage and other unseen

73
  Roques, La maniere de negotier, ff. 239–40. In the early nineteenth century, the insurance firms
of central India ‘were compelled to bribe the most powerful plunderers of the day’. John Malcolm,
A Memoir of Central India, 2 vols. (London, 1824), II, p. 93.
74
  Supplementary Calendar, p. 87; English Factories, 1646–50, p. 129.
75
  British Library, Factory Records, Surat, Series G/36, vol. 106, f. 1.
76
  The effects of the two succession crises (1628 and 1657) on trade and insurance are described in
English Factories, 1624–29, p. 235; 1655–60, pp. 121–2.
77
  British Library, Factory Records, Surat, Series G/36, vol. 94, ff. 72a-b.
78
  English Factories, 1651–54, pp. 177, 224.

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risks of long sea voyages were covered. In one case, the delay in the arrival from
the Red Sea of a bullion ship (with a cargo worth one million reales of eight)
forced the premium to rise from 3 to 30 per cent.79 In another instance, the reason
ascribed to a 10 per cent premium charged on a Dutch ship was the long voyage
it was poised to undertake.80 The insurers, mostly ṣarrāfs, believed in the risks at
sea increasing with the length of the sailing distance.
It is not clear whether war risks were also covered while contracting marine
insurance, though it appears from a lengthy dispute between the English and the
Surat insurers that this may have been the case. During the first Anglo-Dutch war
of 1640–52, the English insured the cargo aboard the ship Supply for 7,500 rupees.
After its seizure by the Dutch, the English advanced their claims but the insur-
ers refused to pay on the grounds that the English ship sailed in times of peace
between the two companies and was voluntarily surrendered to the Dutch.81 The
ambiguity over the assessment of risks and subsequent claims prolonged the dispute
though apparently the insurers did not compensate the English for the loss of their
ship—a complex story of a Surat ṣarrāf insuring European treasure rather illegally
transported from Bombay to Surat in 1694 can be followed in English records.82

Credit Insurance

The risk of loss through financial transactions was seldom insured. An exception
to this was credit insurance, whereby the insurers covered the creditors for their
losses.83 In 1648, the English factors remitted money from Gujarat to Sind and
insured their hundis. The low premium paid by them indicates that commercial
papers were exposed less to the hazards of loss than goods or bullion.84 If such
cases were widespread, it would mean that the movement of capital through
credit instruments was secured by insurance. The evidence that lenders of risk-
sharing loans (called awak or respondentia) too cushioned themselves against loss
comes from the description of a risk-sharing commercial practice designated as
awak-vyaju:

79
  English Factories, 1642–45, p. 92. These were years (1640s) of intense piratical activities by
the Malabaris and the French. See Surendra Gopal, Commerce and Crafts in Gujarat, 16th and 17th
Centuries, New Delhi, 1975, p. 112.
80
  English Factories, 1651–54, p. 177.
81
  Ibid., pp. 224, 251; 1655–60, pp. 10, 15, 62, 71, 74. See English Factories, 1651–54, p. 214 for
the ‘news of the capture of the four English ships by the Dutch’. According to ‘the country people’ on
board the Supply and Lanneret, the English had offered no resistance.
82
  British Library, Factory Records, Surat, Series G/36, vol. 94, ff.12a, 48a, 59b, 60a-b, 61a, 63a.
83
  The development of credit insurance is usually considered to be a nineteenth century phenomenon.
Alan G. Jamieson, ‘Credit insurance and trade expansion in Britain, 1820–1980’, Accounting, Business
and Financial History 1 (1991), pp. 163–5.
84
  English Factories, 1646–50, p. 103; Factory Records, Surat, G/102 A, f. 65. When the Kolis,
notorious for their highway robberies, intercepted a caravan from Surat to Agra the bag carrying bills
of exchange was opened by them and returned to the merchants. English Factories, 1651–54, p. 113.

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 The moneychangers (Şarrāfs) in Mughal India / 161

a transaction in which a person who had made a respondentia advance enters into
an engagement with some third person, who for a bonus or stipulated interest,
insures him against loss.85

Insurance became a profitable business for the ṣarrāfs particularly when they
were able to spread the risks over various contracts or through reinsurance.86

A Mughal moneychanger (s.arra-f ) plying his trade. Coins of several

denominations are on display for exchange including rupees. Bibliotheque
Nationale France, Paris, reproduced in Fernand Braudel, The Wheels of
Commerce, tr. Sian Reynolds (London, 1982), p. 126.

  Wilson, Glossary, p. 40. See Habib, ‘Merchant Communities in Precolonial India’, pp. 395–96.
85

  Profits also depended on the sarrafs’ ability to carefully assess the risks as well as other factors
86

of appraisal. When the English factors sent bullion from Surat to Masulipatam in the junk of some
Mughal official ‘noe man’ agreed ‘to insure on her for 20 per cent’. British Library, Factory Records,
Miscellaneous, Series E/40, vol. 28, ff. 226–7.

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