Writing is like T20 batting. If you block, you might as well retire to the pavilion! -- Pete Langman
Expat in Germany

Saturday, April 5, 2014

The Centralised Banking system!!

The pleasure of putting up this post comes after having a first class experience of seeing a group, which when asked which organisation is the central bank in India! They replied, 'CBI'! The banking system in our country is little funny(though frankly, I do not know how it is in other countries!) There is a central bank controlling all the banks. Every bank reports to the RBI. Further, there are umbrellas under which different banks are placed. There are commercials like ICICI,HDFC etc., cooperatives like NABARD.

Getting into the history of banking, in Indian mythology, there is an extremely successful moneylender and banker called Kuber who does not even exempt God from paying back debts. Even from Vedic times(no idea when exactly to define this!!), there were trades and exchanges, those of gold and currency too. Ever since, Indians, with their huge saving mindset, kept saving and banks came to good use for us! Even in the time of kings and empires, all the money transactions and trades were to be reported to a central power, called the kosadhikari, the treasurer. The colonial times saw banks as fundraisers for wars. The presidency banks, Bank of Bombay, Calcutta and Madras, which came together to be called the Imperial Bank of India, were used especially for this purpose.

For few years, the Imperial Bank acted as the central bank to which all the banks had to report and which would monitor all the activities of any bank. There were banks like Bank of Baroda, Bank of Allahabad, Canara Bank, Indian Bank etc..Subsequently, after achieving independence, a clear system was designed in banking. The Reserve Bank of India, formed in 1935 took the place of the central bank. Most of the banks were formed as part of the Swadesi movement. All these banks were nationalised in 1969. This ensured a lot of revenue for the government. But later, after globalisation and liberalisation, many private enterprises came up. Whoever it is, they have to abide by RBI rules and report to it.

This kind of banking actually helps people. It is reachable to the poorest of the poor and to those in any corner of the country too! One just have to know they can reach it. So, the central bank of the country is the Reserve Bank of India and not the Central Bureau of Investigation!!