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A Comprehensive History


Velayutham Saravanan

HISTORY OF THE RESERVE BANK OF INDIA (1935-51) VOL. 1
By S.L.N. Simha
Reserve Bank of India, Mumbai, 1970, pp. xxiv 878, Rs. 1300.00

THE RESERVE BANK OF INDIA 1951-1967, VOL. II; THE RESERVE BANK OF INDIA 1967-1981, VOL. III
By G. Balachandran
Reserve Bank of India, Mumbai, 1998 & 2005, pp. 1190 & pp. 1197, Rs. 1300.00 each

VOLUME XXXI NUMBER 9 September 2007

At the outset, the Reserve Bank of India has to be applauded for bringing out its comprehensive history for a period of four and half decades, in three mammoth volumes, each covering a span of about fifteen years. The first volume prepared by S.L.M.Simha is divided into four parts. The preparatory years viz., those prior to 1935, relate to the origin and development of the idea of Central Banking in India from the late eighteenth century, in comparison with other countries. It discusses with greater detail the different viewpoints regarding the functions, ownership and the take over of a portion of the Imperial Bank’s functions from early nineteenth century. An interesting account is given about the introduction of the Reserve Bank Bill, the controversy arising in terms of power and functions and, how the final bill was passed. Further, it also captures the changes in the currency system together with issues concerning the developments in the exchange rate almost from the early nineteenth century onwards. The reader is being provided with an overview of the financial market as well as the banking system for both organized and unorganized money markets for more than a century. Finally, the provisions of the RBI Act have been discussed elaborately. Precisely, this part gives a comprehensive account about the origin and history of central banking along with the currency system, exchange and money market and banking system from the late eighteenth century.   The Bank’s infrastructure and functions got developed during the formative years— 1935-39. The government, least concerned about recovery from the depression was instead more concerned on maintaining laissez-faire in the economic sphere. This necessarily curtailed the central banking policies. Despite this, the Bank concentrated on the bank rate, open market operations and the management of exchange during the depression years. The banking crisis in the 1930s propelled the RBI’s emergence as the Bankers’ Bank following regulation of the operations of commercial banks and the non-scheduled banks too being brought under its control. At the same time, the Bank has initiated measures to deal with problems in the domain of agriculture credit and the cooperative movement. This period witnessed the resignation of many top level officers owing to differences among the board members as well as shareholders, resulting in a slow down of its growth and failure in the discharge of its responsibilities.   During World War II (1939-45), ...


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