Language
Download App

Bookmark Bookmark

Banking Ki Class: Lesson-1

History Of Banking

The Reserve Bank of India is the central bank of the country. Central banks are a relatively recent innovation and most central banks, as we know them today, were established around the early twentieth century.

The Reserve Bank of India was set up on the basis of the recommendations of the Hilton Young Commission. The Reserve Bank of India Act, 1934 (II of 1934) provides the statutory basis of the functioning of the Bank, which commenced operations on April 1, 1935.

The Bank was constituted to

  • 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.

The Bank began its operations by taking over from the Government the functions so far being performed by the Controller of Currency and from the Imperial Bank of India, the management of Government accounts and public debt. The existing currency offices at Calcutta, Bombay, Madras, Rangoon, Karachi, Lahore and Cawnpore (Kanpur) became branches of the Issue Department. 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 Japanese Occupation of Burma and later up to April, 1947. After the partition of India, the Reserve Bank served as the central bank of Pakistan up to June 1948 when the State Bank of Pakistan commenced operations. The Bank, which was originally set up as a shareholder's bank, was nationalized in 1949.

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. When India commenced its plan endeavours, the development role of the Bank came into focus, especially in the sixties when the Reserve Bank, in many ways, pioneered the concept and practice of using finance to catalyze development. The Bank 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 etc. to build the financial infrastructure of the country.

With liberalization, the Bank's focus has shifted back to core central banking functions like Monetary Policy, Bank Supervision and Regulation, and Overseeing the Payments System and onto developing the financial markets.

You might be interested:

Vocab Express- 406

Vocab Express- 406 Dear Aspirants, To enhance your vocabulary here are 5 new words. Use these words to improve Written and Spoken English skills. In case you have missed out on our previous Vocab Express, we would strongly advise you to read it. ...

10 months ago

Current Affairs Video: 20 February 2018

Current Affairs Video: 20 February 2018 brings to its viewers the 'Top 10 Current Affairs of the day' covering National, International, Sports and other events important for any competitive exams like IAS/PCS, SSC, Banking, etc To view similar Curren ...

10 months ago

Current Affairs Video: 19 February 2018

Current Affairs Video: 19 February 2018 brings to its viewers the 'Top 10 Current Affairs of the day' covering National, International, Sports and other events important for any competitive exams like IAS/PCS, SSC, Banking, etc To view similar C ...

10 months ago

Current Affairs Video: 16 February 2018

Current Affairs Video: 16 February 2018 brings to its viewers the 'Top 10 Current Affairs of the day' covering National, International, Sports and other events important for any competitive exams like IAS/PCS, SSC, Banking, etc To view similar C ...

10 months ago

SBI Clerk Prelims 2018: Previous Year Paper Analysis & Pattern change

The State Bank of India will be conducting SBI Clerk Recruitment Exam in the month of March/ April 2018. We all know that SBI conducted the Recruitment of Clerks or Junior Associates 2 years back in 2016. Since then a lot of changes have been in ...

10 months ago

Current Affairs Video: 15 February 2018

Current Affairs Video: 15 February 2018 brings to its viewers the 'Top 10 Current Affairs of the day' covering National, International, Sports and other events important for any competitive exams like IAS/PCS, SSC, Banking, etc To view similar C ...

10 months ago

Provide your feedback on this article: