The Reserve Bank of India, India’s central bank, turned in an income of Rs 37,070 crore ($8.2 billion) last year and passed on Rs 15,009 crore ($3.5 billion) to the Government, its owner. Well, what if the RBI were listed? Well, it’s not improbable. The Swiss National Bank, the central bank of Switzerland is 55 per cent owned by public institutions while the remaining 45 are traded in the stock market. The SNB is obliged by the Swiss Constitution to keep the interests of the country ahead of all.
But India’s RBI was private too, once. The RBI was constituted as a private shareholders’ bank in 1935 with an initial paid-up capital of Rs 5 crore.
Burma (Myanmar) seceded from the Indian Union in 1937 but the RBI acted as Central Bank for Burma till the Japanese occupied the country and up till April 1947. After partition, RBI also served as the central bank of Pakistan, up till June 1948.
The RBI was nationalised with effect from January 1, 1949, a little over a year after India achieved Independence. Now, the entire ownership of the RBI is with the Government of India. The ownership or the nature of it is one reason there are many interesting debates on whether the RBI has sufficient independence or merely follows the Government’s diktats. To the RBI’s credit, many of its governors have shown considerable resolve in this department. But that’s another story for another day.
Reprinted with permission from www.indiaspend.com
