From our Readers: Who controls the banks?

Dear Editor,

This is a comment in reference to your article, “Lenin’s teaching on the role of banks in the monopoly stage of capitalism” (22/7/2020).

It is important to note that Indian big capitalists led by Tatas and Birlas wanted control over the monetary policy as their financial and industrial strength grew after the First World War. They started agitating for the establishment of a Central Bank (Reserve Bank of India) in the 1920s as they were opposed to the arbitrariness in the Rupee-Sterling exchange rate fixed from London. The exchange rate was manifestly in favour of Britain against Indian interests. Britain refused to acknowledge the reasoned arguments of many economists and capitalists like G D Birla and Purushottamdas Thakurdas against this arbitrariness. Finally, British colonial government acceded to the formation of Reserve Bank of India in 1934-35 but retained the control of monetary policy in London till 1947. Draining of India by various means including through arbitrary and unequal monetary policies was essential for the survival of Britain at that time since it had become a debtor state after the first world war.

However, to appease the Indian capitalists Tatas and Birlas were inducted into the Governing Board of RBI right since 1934-35. This continues to this date. It is significant that after independence in 1947 RBI’s mandate includes among other things “supervision and regulation” of all banks both in the public sector and private sector. In the current Central Board of Directors of RBI too sit various capitalists including the chairman of Tata Sons along with various professional representatives of the bourgeoisie (https://www.rbi.org.in/scripts/bs_viewcontent.aspx?Id=2453). The reader is thus free to come to his own conclusion on who controls all banks be they public or private.

SK, Dharwad

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