RBI 90th anniversary: 10 interesting facts to know about India’s central bank

From starting as a shareholders’ bank to additionally serving as the central bank of Pakistan for an interim period post the country’s partition, the Reserve Bank of India (RBI) has had an intriguing journey over the past 90 years.

April 1, the start of fiscal year 2024-25, also marked the 90th anniversary of the inception of RBI – India’s banking sector regulator which has earned global praise for its prudent monetary policy that has kept inflation in check despite the recent global surge.

The completion of RBI’s 90 years is a “historic milestone”, Prime Minister Narendra Modi said, adding that the central bank has played a role in highlighting the success of India’s banking sector globally.

Here are 10 interesting facts to know about the RBI:

• The Reserve Bank of India was set up based on the recommendations of Hilton Young Commission – a panel formed under colonial British rule to explore the possibility of designing a coordinated financial policy for the British colonies.

• The bank commenced operations on April 1, 1935, and the Reserve Bank of India Act, 1934 (II of 1934) provided the statutory basis for its functioning.

• RBI was constituted to discharge three primary functions: regulate the issue of banknotes, maintain reserves with a view to securing monetary stability, and to operate the credit and currency system of the country to its advantage.

• RBI began its operations by taking over from the government the functions that were, till then, performed by the Controller of Currency and the Imperial Bank of India. The offices of the banking department were established in Calcutta, Bombay, Madras, Delhi and Rangoon.

• Burma (Myanmar) seceded from the Indian Union in 1937 but the Reserve Bank continued to act as the central bank for Burma till the Japanese Occupation of Burma and later up till April 1947.

• Similarly, after the partition of India, the RBI served as the central bank of Pakistan up to June 1948 when the State Bank of Pakistan commenced operations.

• Originally set up as a shareholder's bank, the RBI was nationalised in 1949, two years after India attained independence from British rule.

• “An interesting feature of the Reserve Bank of India was that at its very inception, the bank was seen as playing a special role in the context of development, especially agriculture,” the RBI said, in a note released on its website. The development role came into focus during the 1960s, when the RBI “pioneered the concept and practice of using finance to catalyse development”, it added.

• RBI was also instrumental in institutional development and helped set up institutions like the Deposit Insurance and Credit Guarantee Corporation of India, the Unit Trust of India, the Industrial Development Bank of India, the National Bank of Agriculture and Rural Development, the Discount and Finance House of India.

• With liberalisation of the economy in the early 1990s, the bank's focus shifted back to core functions like monetary policy, bank supervision and regulation, and overseeing the payments system and developing the financial markets.