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In which year was the Reserve Bank of India nationalised?
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Answer: Option D — 1949
Detailed Solution
When the Reserve Bank of India was set up on 1 April 1935, it was a private shareholders' bank. Its share capital of ₹5 crore was held by private individuals, though the government had some control over its management. Several countries' central banks at that time were privately owned, such as the Bank of England.
After Independence, there was a strong feeling that the central bank of a newly independent country should be owned by the State, so that it could work closely with the government's economic policies and plans for development. Parliament passed the Reserve Bank of India (Transfer to Public Ownership) Act, 1948, and the RBI was nationalised on 1 January 1949. The private shareholders were paid compensation, and the entire share capital was transferred to the Government of India.
The Bank of England was also nationalised in 1946, in the same period.
Nationalisation of the RBI should not be confused with the nationalisation of commercial banks:
1955: the Imperial Bank of India was nationalised and became the State Bank of India (SBI), on 1 July 1955, on the recommendation of the A.D. Gorwala Committee (All India Rural Credit Survey).
1959: the subsidiaries of the SBI (state-associated banks) were taken over.
19 July 1969: 14 major commercial banks, each with deposits of over ₹50 crore, were nationalised by the government of Prime Minister Indira Gandhi.
15 April 1980: 6 more banks, with deposits of over ₹200 crore, were nationalised.
After the reforms of 1991, private banks were again allowed, and public sector banks were merged; in 2019-20, ten public sector banks were merged into four, reducing the number of public sector banks to 12.
Why not the other options?
- ✗1935 is when the RBI was established.
- ✗1955 is when the Imperial Bank became the SBI.
- ✗1969 is when 14 commercial banks were nationalised.
Quick tip
Remember: RBI nationalised = 1 January 1949; SBI = 1955 (from Imperial Bank); 14 banks = 19 July 1969; 6 banks = 1980; now 12 public sector banks.
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Money, Banking & RBI — Preparation
This question tests your understanding of Money, Banking & RBI, a key topic in the General Knowledge section. The detailed solution above uses a step-by-step approach to show the reasoning, and where available, a shortcut that helps you solve similar questions in under 90 seconds during the actual exam.
This topic covers money and its functions, the banking system in India, the Reserve Bank of India and monetary policy, policy tools such as the repo rate, reverse repo rate, CRR and SLR, bank nationalisation, types of banks, and payment systems such as NEFT, RTGS and UPI. Banking exams test this topic in depth. Questions often ask when the RBI was set up (1935, on the recommendation of the Hilton Young Commission), when it was nationalised (1949), what each policy rate means, and when major banks were nationalised (14 banks in 1969 and 6 in 1980). Current policy rates change often, so check the latest RBI announcements. Practise the money, banking and RBI questions below, written in the style of the general awareness sections of exams such as SSC, banking, railways, CUET GAT, MAH CET and CLAT. Each question comes with a detailed explanation that adds related facts, so every question helps you revise more than one point.