ABSTRACT
Mercantile Bank had already suffered its fair share of losses due to fraud and bad debts since it first opened its doors in Bombay in 1854. Its most notable fraud so far had been the Hong Kong opium fraud in 1862 and its most substantial losses due to bad debts had been those incurred in the mid-1860s in the aftermath of the Bombay boom and share mania. However, by the 1870s the Eastern banks had the benefit of rapid tele graphic communication which enabled the head offices of the Eastern banks in London to be in better touch with their branches in the East and raised the hope that some of the risks of earlier days might be a problem of the past. But, even though communications had become more rapid and efficient by the 1870s, the Eastern banks still had to rely on the skill and integrity of the officers in charge of their far away branches in carry ing out their duties and in following head office instructions.
