Hyderabad: The Hyderabad Fund case may have hit international headlines as India and Pakistan claimed over 35 million pounds locked up in a British bank for over seven decades following Operation Polo on Sept 17, 1948, but what many do not know was that the Nizam had held talks with the Chase Bank of the US, the International Monetary Fund (IMF) and the World Bank (WB).The Nizam govt, just before the Operation Polo that led to the merger of the Princely State of Hyderabad with the Indian Union, had negotiated with several international players to build a reserve of funds to facilitate Hyderabad’s imports from overseas.
According to archival records with the National Archives of India (NAI), Mir Nawaz Jung, who was the agent-general of Hyderabad in London, carried on negotiations with the Chase Bank of the US. Hyderabad finance and external affairs minister Moin Nawaz Jung had explored the ways and means of securing the membership of the International Monetary Fund and of the World Bank, according to archival records.India’s agent-general in Hyderabad, KM Munshi, while briefing the developments in the Hyderabad State before the Police Action to Union home minister Sardar Patel, stated in his letter in early 1948 that Hyderabad prime minister Mir Laik Ali, based on the advice of Ghulam Muhammad (Pakistan’s first finance minister), had a clear-cut scheme to build a reserve of Sterling and hard currency in order to facilitate Hyderabad’s imports.“The accumulated reserve in London is about three millions and odd Sterling. I understand it is negotiating with the govt of India, through the Reserve Bank of India, for conversion of the Govt of India’s securities held by it into sterling securities or gold. The Govt of India, I understand, has informally agreed to this and if this materialises, Hyderabad will have sufficient sterling at its disposal in the UK,” Munshi informed Sardar Patel.Archival records also reveal that Hyderabad state had proposed to negotiate for the gradual utilisation of this reserve to meet its requirements in the UK and its partial conversion into currencies to meet its requirements of imports from other foreign countries. “Negotiations are also said to be afoot with the US govt or banks for a loan to meet its imports from the USA,” he had stated.It was also stated that there was an attempt to control the exchange manipulation and insistence on trade agents in foreign countries and the right to receive hard currency for Hyderabad equivalent to its exportable surplus, to “make Hyderabad economically sovereign and so powerful as to make India’s position difficult.”Official communication also revealed that the Nizam govt had, with “frantic speed”, launched a programme to build up reserves and stock as soon as possible in order to face any short-range crisis. It also proposed to enter into trade connections with foreign countries by appointment of trade agents or commissioners to the Middle East including Iran and Egypt, Burma, Thailand, Japan, Australia, Indonesia, UK and other European countries, USA, Canada, and South American countries.
