Question
Download Solution PDFWhich RBI Governor helped the smooth transition of the "Reserve Bank of india" from a shareholder's institution to a State owned organisation?
Answer (Detailed Solution Below)
Detailed Solution
Download Solution PDFThe correct answer is CD Deshmukh.
Key Points
- CD Deshmukh was the first Indian to serve as the Governor of the Reserve Bank of India (RBI).
- He played a pivotal role in transitioning the RBI from a private shareholders' institution to a state-owned organization in 1949.
- The Reserve Bank of India was nationalized under the Reserve Bank of India (Transfer of Public Ownership) Act, 1948, which came into effect on January 1, 1949.
- Deshmukh's leadership ensured the smooth transfer of ownership while maintaining the institution's stability and public trust.
- He later served as the Finance Minister of India from 1950 to 1956, contributing significantly to the country's economic policies.
Additional Information
- Reserve Bank of India Nationalization:
- The RBI was established as a private shareholders' institution in 1935, under the Reserve Bank of India Act, 1934.
- It was nationalized in 1949, making it fully owned by the Government of India.
- The nationalization marked a critical step in aligning India's central banking system with its planned economic objectives post-independence.
- CD Deshmukh's Contributions:
- He was instrumental in India's economic planning and policy-making during his tenure as Finance Minister.
- He introduced measures for rural development and social sector investment, such as the establishment of the Imperial Bank of India (now SBI) as a public institution.
- Role of the RBI Post-Nationalization:
- The RBI became the principal monetary authority responsible for issuing currency, managing inflation, and regulating banks.
- It also took on developmental roles, such as promoting financial inclusion and supporting agriculture and industry.
- Significance of Nationalization:
- Nationalization ensured that the RBI would work in alignment with the government's economic priorities, particularly in areas like poverty alleviation and industrial growth.
- It also enhanced public confidence in India's financial system.
Last updated on Jun 19, 2025
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