Monday, February 13, 2012

Committees on Banking in India

Various Committees on Banking in India

One of the earliest Committees on Banking in India was in 1929.  It was headed by Shri B N Mitra to study and recommend on 'Central Banking Functions and Agricultural Finance'.  RBI was set up in 1934 on the recommendations of Hilton Young Commission, by taking over the functions from the then Imperial Bank of India. In the pre-independence era, two more Committees were set up to study the Agricultural Finance and Cooperative Societies.  These were headed by 1. DR Gadgil and 2. RS Saria.  After independence, several Committees studied banking system whose recommendations led to establishing of RBI as a public body in 1948, setting up SBI in 1955 after nationalising IBI and so on.  Mostly the focus was on extending rural credit and increasing the banking services to the rural areas what is now referred as Financial Inclusion.  Between 1947 and 1969 as many as seven Committees were asked to go into various aspects of banking, primarily resulting in announcement of Lead Bank Scheme and Nationalisation of 14 Commercial Banks.

Again during the period between 1969 and 1990, several committees were set up, numbering to 33, mainly dealing with Customer Service (headed by RK Talwar and MN Goiporia, both were Chairman of SBI in seventies and nineties respectively), Financing to SSIs, setting up of RRBs, Simplication of Documents, establishment of NABARD, Money Market Operations, etc.  The landmark reference is always the Committee on Financial Sector Reforms in 1991 headed by Shri M Narasimham, former Governor of RBI who again headed another Committee in 1997-98. Interestingly, besides all the above Committees set up for various purposes, there were also about ten Committees, mostly headed by DGs, EDs and Senior Officials of RBI and other experts, dealing with mechanisation and computerisation in banks in India. In all, as many as 49 Committees were set up between 1991 and 2010.  Thus, the total number of Committees is at 92 between 1929 and 2010, all focussing on improvement of systems and procedures or introduction of new products and services in banking industry in India.

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