The evolution of Reserve Bank of India as a full-service national institution

I just figured Dr YV Reddy has put up a website which has all his major speeches as a policymaker and post his policymaker avatar.

One such speech looks at evolution of RBI as what Dr Reddy calls as a full-service national institution. This is even bigger than the oft cited term for RBI as a full-service central bank and its evolution being different from the other central banks in the world. By calling it a national institution, Dr Reddy looks at the several development activities RBI has undertaken (both willingly and by force) in its history.

In conclusion, the RBI has been serving the nation since Independence to the best of its capacities and acquired a reputation for high integrity and professional competence. Over a period, it has won the trust of people at large and the financial system, particularly the banking system. However, the extent to which and the way it could serve the nation has been dictated by the demands from the government and evolving economic compulsions.

In doing so, it wore different caps, custodian of the trust of people in money and finance; the protector of integrity of banking system, the policy instrument for development and adviser to State Governments also.

It was sometimes an agent, often an adviser, and to the extent feasible, an operationally independent central bank.

Over a period of 70 years, RBI has earned the respect of people at large, domestically, and admiration of many, globally, as a full service national financial institution.

The speech was given at State Bank of Pakistan and it would have been great if the former Governor of RBI even discussed the RBI events during partition. But perhaps given the sensitivity of the matter, he avoided it. Even then some anecdotes etc could have been included by looking at the brighter aspects of RBI functioning during the Partition.

Another thing is the speech is hardly critical of any development within RBI. The evolution is discussed mostly in the positive light and no missteps are discussed in its nearly 85 year journey. Dr Reddy has such wide experience and has been a student of world monetary affairs for a very long time. By touching on certain matters which offers scope for improvement and introspection, one could be made to think over future of RBI and central banking in general.

Nevertheless, a good overview…

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