Letters: RBI's legacy

The special report "A new milestone at Mint Road" (April 2) reminds me that the Reserve Bank of India (RBI), which is now 80, was less than 14 years old when I joined it in 1949. The Times of India, in an editorial, referred to it then as a 14-year-old, young maiden. It is a thrill to see her attain a great grand motherly age in my life time.

The year 1949 was momentous in the history of RBI. On January 1, 1949, it was nationalised and on March 16, vast powers were conferred on it by the Dominion Parliament under the Banking Regulation Act, 1949, which virtually made it a monarch of the country's banking system. The media gave wide coverage to the Act, wholeheartedly welcoming the powers conferred on the RBI under the Act.

By then, C D Deshmukh was approaching the end of his historic tenure as the RBI's first Indian governor. While he was happy at the new responsibility that the nation had entrusted on the RBI under the new banking law, he was sceptical about its nationalisation (in fact, he had opposed it) from the viewpoint of its autonomy. His concern became so obvious when he wrote agitatedly around April to K G Ambegaonkar, additional secretary in the finance ministry, referring to the latter's letter to Datar, a senior RBI officer, asking him to accompany him (Ambegaonkar) to Calcutta (now Kolkata), where he was going to study the banking crisis in Bengal, in the wake of the Partition.

Deshmukh, in his letter, wrote to Ambegaonkar that it was not right for him to direct Datar in the way he did: "You should have asked me or one of the Dy Governors to make the services of Datar or another RBI officer available to you". The move on the part of Ambegaonkar, Deshmukh contended, would give "wrong signals in the wake of the recent nationalisation of the Bank". He concluded the letter by adding that "I was so upset on seeing your letter that I tried to speak to you on phone but the lines were not available."

R C Mody, New Delhi

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