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Economy holds a very important role in shaping up of a country. It actually  helps  creating  the basic social structure and physical infrastructure, of the land through integration of various sectors like agriculture, industry , service and social groups like producer,  household, government  etc. The economy, in a way, shows up the overall financial condition and denotes the country itself as an economic unit. A Central Bank, as monetary authority brings in the necessary financial discipline which the economy needs so that it may work to the best interest of the country and its citizens in terms of money supply, currency & forex management, banking services and overall executive control and administration of the banking sector. Every country has its own central or apex bank which operates at the policy level and administers other banking entities of the country through statutes, guidelines, advisories, rate dispensation, debt management as per the policy of the government and as may be required for adapting to the rapids of the world economy. In addition to these a central bank is also a repository of country-specific economic data. Central banks are a relatively recent innovation and most central banks, as we know them today, were established around the early twentieth century the oldest being, Sweden’s Riksens Ständers Bank (the Estates of the Realm Bank) set up around 1668, which in 1867 received the name Sveriges Riksbank  (pronounced as sveuh·ree·uhs riks·bangk). 

The Reserve Bank of India (RBI), set up under the RBI Act, 1934, commenced its operations on April 1, 1935 with  Sir Osborne Smith been appointed as the first Governor, has stepped into its 90th year of existence this year. It was established to serve as the custodian of India’s monetary and financial stability. Over these nine decades, RBI has evolved, adapting to the changing economic landscape while remaining committed to the economic progress of the nation and the welfare of its people. RBI’s story mirrors India’s story, full of resilience, reinvention, and quiet conviction. RBI is in the centre point of building that ecosystem at the intersection of finance and technology, where it is more than just a regulator. It’s the “reason” why India could go from long queues in bank branches to instant bank transfers on mobile phones ! 

The milestones set up along the RBI’s travelled route in last nine decades are very many. A country which was one time mostly dominated by the indigenous money lenders (like Shroffs, Marwaris, Sindhis, Chettiars, Kabulis etc)  and banks set up by rich Indian businessmen and British Managing Agencies, had an unstable, inconsistent, not-so-trustworthy banking ecosystem. The General Bank of India was established in 1786, followed by the Bank of Bengal, the Bank of Bombay, and the Bank of Madras. These banks were known as the Presidency Banks and were established under the charters of the British East India Company. In between there had been host of smaller banks around the country, which were promoted with the private capital of princely states (also called native states) and wealthy merchants mostly to finance the trade of textiles, 

spices, indigo, opium etc. The Swadeshi Movement led to the establishment of several indigenous banking institu

tions, such as the Punjab National Bank, the Bank of India, and the Central Bank of India. The Imperial Bank of India (later transformed into State Bank Of India)  was formed by the amalgamation of the three Presidency Banks. It acted as the central bank of India until the establishment of the Reserve Bank of India (RBI) in 1935.

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 upto April, 1947. After the partition of India, the Reserve Bank served as the central bank of Pakistan upto June 1948 when the State Bank of Pakistan commenced operations. The Bank, which was originally set up as a shareholder’s bank, was nationalised in 1949. 

An interesting feature of the RBI was that at its very inception, the Bank was seen as playing a pivotal role in the context of development of Agriculture. With the country commencing its plan endeavors through Five Years Plans, the development role of the Bank came into focus, especially in the sixties when the RBI in many ways, pioneered the concept and practice of using finance to catalyse development. 

“Long years ago we made a tryst with destiny, and now the time comes when we shall redeem our pledge, not wholly or in full measure, but very substantially.” These famous lines once uttered by Pandit Jawaharlal Nehru on the eve of India’s independence holds good for the RBI as an institution as well. As in the case of most institu

tions, in these bygone period, some of the purposes of the establishment of RBI have been achieved and some not. However the bank has endeavored to adapt itself to the requirements of the situation and to play its due role in the task of developing a credit machinery, inherently  sound, so as to protect the depositors’ interest and at the same time adequate for meeting the requirements of agriculture, manufacture and trade.

Post independence the greatest challenge was to establish the Indian Rupee phasing out the British currency and that was the a major task with RBI. In parallel, it also established several other funding agencies like 

NABARD, SIDBI, IDBI which were focused towards lending in specific fields.  Bank nationalization of 1969 and 1980 and listing of PSBs in the capital market were two important steps which gave the banking sector the required push for performance. Then came the liberalization of the Indian economy in 1981 in which the role of the apex bank was substantial and exemplary. A probable fall out of the liberalisation was making the USdollar partly convertible in 1994 followed by interest rate been de-administered. The watershed moment for the Bank was 2016 which saw the demonitisation and constitution of Monetary Policy Committee (MPC) to decide policy rates and inflation targets to make the process more transparent. Introduction of Insolvency and Bankruptcy Code, (IBC) in 2016 had given the banking system an extra edge to put a reign on the deteriorating NPA scenario. Post 2016 RBI took a major stride in building up the digital banking and payment system backbone of the country and also built up an ecosystem as outlined and visualized in the government policy of financial inclusion.  

RBI@90 sets up the trajectory towards its centenary with confidence, determination, and a clear vision. As the RBI Governor Mr Malhotra pointed out that such a journey ahead would demand continuous adaptation and agility; fresh thinking and innovation; collaboration and coordination; and an unwavering commitment to excellence and perfection. 

We, at the Reserve Bank, remain fully prepared to meet all challenges and seize all opportunities, to contribute proactively and vigourously, to India’s  economic progress.