5. This discussion will have served to make clear a distinction highly important to the problem of the Indian Bank Rate. When we say that the Indian Bank Rate is apt to be high, we mean, not that the _average_ effective rate over the whole year is high, but that the _maximum_ rate in each year, effective for periods of shorter or longer duration, is generally high. A high average rate and a high maximum rate are likely to call for different explanations and, if a remedy is sought, for different kinds of remedies. The available evidence does not suggest that the average rate in India is at all unduly high for a country in India’s stage of economic and financial development. Some of the Exchange Banks, for example, do not find it worth their while to offer more than 3½ per cent on Indian deposits fixed for a year. It is the high maximum rate almost invariably reached which calls for enquiry. The phenomenon under discussion is in no way peculiar to India and does not arise out of those features of the Indian system which are characteristic of a Gold–Exchange Standard. We find the same thing in any country where the demand for funds for financing trade is to a high degree seasonal and variable in amount throughout the year, and where, at the same time, these funds have to be remitted from some far distant foreign centre—in the countries of South America, for example. In fact, by the establishment of a par of exchange between the rupee and sterling; the severity of seasonal stringency has been greatly moderated. The exceptionally high Bank Rates of 1897 and 1898 were partly occasioned by a natural timidity on the part of the Banks in importing funds at a rate of exchange which at that time was exceptionally high. The Banks had no guarantee that exchange would be maintained at or near the existing level, and if they imported funds they ran the risk of having to bring them home again at a heavy loss. Under present arrangements the maximum fluctuation in exchange between the busy season and the slack is known and limited. But while the stabilisation of the gold value of the rupee has done much for the Indian Money Market, and has rendered a 12 per cent Bank Rate most improbable except at a time of wide–spread crisis and panic, it does not prevent an 8 per cent or even a 9 per cent Bank Rate from being a comparatively common occurrence. Is it possible to conceive of any remedy or moderating influence for the somewhat severe seasonal stringency still experienced? 6. It is clear that a remedy can be sought in one or other of two ways only. Either the cost of remittance and the maximum range of fluctuation in exchange must be reduced, or a new source for the seasonal supply of funds must be found in India herself. I will discuss these alternatives in turn.