RBI has transitioned into being enabler for market economy: Shaktikanta Das

Shaktikanta Das stated that the RBI has evolved from a central bank focused on resource allocation during the planning era to an enabler for the market economy

Reserve Bank of India (RBI) Governor Shaktikanta Das on Monday said that the Reserve Bank has evolved significantly over the years. Initially focused on allocating scarce resources during the planning era, it has now transformed into a crucial enabler for the market economy.
 

“The Reserve Bank's evolution as an institution has been closely intertwined with the development of the Indian economy. From being a central bank primarily concerned with the allocation of scarce resources during the planning period, the Reserve Bank transitioned into being an enabler for the market economy. We are a full-service central bank, with our functions spanning multiple dimensions. It has been our endeavour to promote a financial sector that is robust, resilient, and future-ready,” said Das, while speaking at the RBI@90 event marking 90 years of the central bank on Monday.

The RBI governor also highlighted pivotal reforms like the enactment of the Insolvency and Bankruptcy Code (IBC) and the adoption of flexible inflation targeting in recent years. These reforms have enabled the RBI to address banking system challenges and maintain price stability more effectively.

He also emphasised that the RBI remains steadfast in its commitment to ensuring a stable and robust financial system, which serves as the cornerstone of India's economic progress.

“The Covid-19 pandemic and the ongoing geopolitical hostilities have tested the resilience of every economy in the world, including India. The well-calibrated and coordinated monetary and fiscal policies adopted in our country went a long way in shielding our economy from these shocks and helped us to emerge even stronger than before. It's a matter of satisfaction that today our GDP growth is robust, inflation is moderating, the financial sector is stable, the external sector remains resilient, and the forex reserves are at an all-time high,” the RBI governor said.

RBI and its history

RBI, the nation's central bank, was established in 1935 following the recommendations of the Hilton Young Commission.

Governed by the Reserve Bank of India Act, 1934, it commenced operations on April 1, 1935, under the stewardship of Sir Osborne Smith as its inaugural governor. Its initial responsibilities encompassed currency issuance and provision of banking services to banks. In 1937, the Central Office of the Reserve Bank was relocated from Kolkata to Mumbai.

Over time, the RBI's mandate expanded significantly, encompassing monetary management, regulation and supervision of the financial system, management of foreign exchange, currency issuance, as well as oversight of payment and settlement systems.