• Investment World
• eWorld
• Brand Line
• Mentor
• Life
• Brand Quest
• The New Manager
• BL Club
• Smartbuy
• Books

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Cross Currency

• Rates
  
  

Shipping

• Ports
  
  

Archives

• Yesterday
• Datewise
• Resources
• In Focus
• In Depth
• Events 2007

Group Sites

• The Hindu
• The Hindu ePaper
• Business Line
• Business Line ePaper
• Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

Outside the Reserve Bank of India building in Mumbai (file photo).

Our Bureau

New Delhi, March 31 The Reserve Bank of India has completed 75 years. April 1 is its birthday.

A Committee – can anyone think of a better way to plan a birthday bash – has been set up to draw up a plan of action for 2009.

However, consistent with RBI style, everything is being done very discreetly. But a trenchant insider says “there is much to be discreet about” because not much has been planned yet.

The grim old thing has had its moments in the sun, though. Its first Governor, Osborne Smith, was an Australian and he set the tone for the Bank’s relationship with the Government.

As the RBI Web site demurely says, “His outlook on policy issues like the exchange rates and interest rates was at variance with that of the Government. He resigned prior to the completion of his term of office of three and a half years.” Truth be told, he was asked to buzz off.

At least three others since then have quietly been told the same thing. Clearly, scrapping with the Government is in its DNA.

But there was one Governor who had his cake and ate it too. The Government wanted something done. He said no, that would not be good for the country. The Government tried to persuade him but he was adamant. Irritated, it withdrew the RBI’s powers in that particular regard. So he quit.

The Prime Minister then made a deal with him. You stay on, he was told, and I will restore the RBI’s powers. Fine, said the good Governor, the RBI honour has been saved – and quietly ignored the fact that during the five or six days that the RBI had been without those powers, the Government had gone ahead and done exactly what he didn’t want done.

But it is not the just the shrew in the Old Lady that defines it. Its bureaucracy runs a close second. Even Governors have bitten the dust before it.

One Governor wanted a nice, new air-conditioned car. In spite of repeated reminders, the fellows lower down wouldn’t deliver. One day he met the officer in charge of administration in the lift and asked about his ‘request’, only to be stiffly told that rules were rules. For the remaining years, the Governor refused to use the office car and drove his own.

The Bank has been accused of indecency as well. Back in the 1960s, referring to the statue of the Yakshini at the Delhi office, an indignant MP asked in Parliament “Sir, is it a fact that the statue of a naked woman has been erected in front of the Reserve Bank of India…?”

Today, along with the Courts and the Election Commission, the RBI is counted amongst the tallest institutions in the country. It has an extraordinary collection of regulatory talent under roof. And thanks to the way it has succeeded in keeping the Indian financial sector out of trouble, it is now looked up to everywhere.

The challenge before it now is to gear up to a world in which India will play a major role. If the RBI has several lessons to offer to the world, not least of which is a premium on caution, there is also much that it can learn from it. Hopefully, the process will not take up the next 75 years.

More Stories on : RBI & Other Central Banks | Events

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Copyright © 2009, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line