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).
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.
“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. “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.
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.
