Before 1949, the Reserve Bank of India (RBI) operated as a privately-owned entity, with its capital held by private shareholders. To bring the central bank under government control and align it with national economic planning post-independence, the Reserve Bank of India (Transfer to Public Ownership) Act, 1948 was enacted.
This Act came into force on January 1, 1949, and provided for the complete transfer of ownership of the RBI from private shareholders to the Government of India. The government compensated the shareholders and took over all shares, making the RBI a fully government-owned institution.
This transition was crucial for strengthening the government's ability to direct monetary policy and ensure that the central bank acted in line with the country's development priorities.
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