From Banyan Tree to Bombay Stock Exchange - the conception of the BSE

Story of the birth of Bombay Stock Exchange – BSE

A few days ago my friend and senior Mr Dinesh Kocchar sent me a story about the Genesis of the BSE, I wasn't aware of the genesis story at the time as I am sure a lot of you must not , so I decided to share it with LinkedIn

On March 29, 1879, five Gujaratis started the Bombay Stock Exchange (BSE) under a banyan tree. The organization that grew under the banyan tree has become the banyan tree of the Indian economy today.

Read on for a trip down memory lane…..

India salutes the astute business sense of Gujaratis and their contribution to Indian business. This document celebrates the story of five Gujarati businessmen and the story of their enterprise in what started as a meeting place for cotton trade and went on to become the Bombay Stock Exchange (BSE) to the importance of BSE in the dynamic India growth story ??

The Bombay Stock Exchange, which has a market cap of Rs 148 lakh crore, initially charged a membership fee of just Rs 1.

BSE founder Premchand Raichand used to supply 65% of the total requirement of British cotton mills, called Roo, ????

If the Reserve Bank is considered the heart of the Indian economy, then the system that supplies blood to that heart is the Bombay Stock Exchange.

It is said that if the Bombay Stock Exchange catches a cold, the whole country catches a fever.

This stock market, which is at the center of economic activity of the country,?turned 144 years old recently.

Today, the stock exchange building is a symbol of the whole of Mumbai, but 144 years ago, it started under a banyan tree on the same spot, and five (5) of the people who played a leading role in its establishment.

The story of this organization and its founders, which is considered as the basis of the economy of a huge country like India, is so interesting that it rivals any film or novel.

The history of Mumbai would be incomplete without mention of Premchand Raichand, a Gujarati malletujar, who was a leading businessman of the nineteenth century.

Premchand Raichand, originally from a Gujarati Jain family from Surat, was the only businessman in Mumbai at that time who could speak fluent English with the British, French with the French traders and Spanish with the Portuguese.

It is said that in those days when cotton was planted all over Gujarat and when all the ripe goods reached Mumbai, Premchand Raichand was the only buyer!

Premchand Raichand was called Cotton King as he bought half of the total cotton production in the country. the city of Manchester in England was considered the main center of cotton mills.

As many as 180 cotton mills were thriving in Manchester in the nineteenth century and most of the cotton to them were supplied by Premchand Raichand.

Premchand Raichand as an international player of Roo ??? started Roo Satta in Mumbai.

In which Dwarkadas Gokaldas,?Mathurdas Harjivan,were also partners of Premchand.

These partners started speculating in commodity products besides Roo. ( The birth of commodities trading)

Initially, Premchand used to gamble in the compound of his bungalow in Byculla, But the number started increasing gradually so he changed the venue.

Horniman Circle near Churchgate had a Town Hall in those days.

Today, the place has become a big park.

There, under a banyan tree, speculation began systematically under the guidance of five prominent mill-owners, named Premchand Raichand, Dwarkadas Dharamsey, Mathuradas Vissanji, Ghanshyamdas Khatau and Dinshaw Petit

It framed rules with a view to bringing discipline

Rs.1 as membership fee for participating in the auction was decided and the organization was named the Native Share and Stock Brokers Association.?

The same organization is today’s Bombay Stock Exchange

Initially a total of 25 traders joined the exchange, out of which

Eighteen were Gujaratis, Four Marwaris, Two South Indians and One Punjabi.

The number increased to 318 in the first month itself.

Common people called them as Chataiyas (???????) as mats were spread out in the open under banyan trees.

The organization that grew under the banyan tree has become the banyan tree of the INDIAN ECONOMY today.

There is grandeur in every talk of the Bombay Stock Exchange.

The amount of deals done here, the presence of the country’s top companies, millions of families involved in the economic upheaval, Bombay Stock Exchange enjoys the status as a model financial institution not only of India or Asia, but of the entire world.

Bombay Stock Exchange is the 11th largest stock exchange in the world with a market cap of Rs.148 lakh crore.

It ranks 5th in the world in terms of the number of daily transactions.

More than 5000 companies are registered in Bombay Stock Exchange. It is number 1 in the world in terms of this number.

The World Federation of Exchanges has been formed to regulate stock exchanges around the world, with headquarters in Paris.

Bombay Stock Exchange also occupies a prominent position among the major stock exchanges which are employed for the management of The World Federation of Exchanges.

All Indians & Gujaratis because they are Indian should feel proud about the Bombay Stock Exchange (BSE).

My key takeaways from this story:

Make knowledge your USP - The reason Premchand Raichand could monopolize the trade with the British, French & Portuguese was that he could speak their language fluently.

?Set up your barriers to entry fast and tall - Obviously, there would have been others who noticed this advantage and tried to level the field. But that is where rapport and the first mover’s advantage create barriers to entry