that the three presidency banks should be merged into one central bank. this led to a legislation, introduced in january 1927, to set up the reserve bank of india. however, it was not until seven years later, in march 1934, that the enactment came through. thus began the exciting and glorious journey of our bank on 1st april 1935. the reserve bank of india was first established as a shareholders ’ bank. subsequently, it was nationalized in 1949. as india became independent in 1947, rbi's “ tryst with nation building ” ran parallel to the nation's “ tryst with destiny ”. the year 1949 also marked the enactment of the banking regulation act which mandated a comprehensive and formal structure of bank regulation and supervision in india. for the first two decades of india's independence, banking was largely concentrated in our cities and major towns. the rural areas were largely left behind. this was a lacuna as the potential of rural savings remained unexploited, and rural credit needs remained unmet. these were also the years when banking had become the centre of political attention. the 1960s were difficult years for the country from an economic perspective. india had fought a war with china in 1962, and soon thereafter with pakistan in 1965. the country also went through three very bad years of monsoon. the country ’ s financial position became extremely poor and the currency had to be devalued in 1966. economic distress started growing as evidenced by rising prices, scarcity of essential commodities and services, low growth and widespread unemployment. it was in the backdrop of this scenario that the union finance minister of the time advocated social control over commercial banks. even as a consensus on social control was emerging, in a swift and unexpected move, 14 major commercial banks were nationalized in july 1969. this decision, justified as being necessary for growth and poverty reduction, was arguably the most important economic decision by the government since independence till that date. nationalization led to sharp expansion of the banking network and impressive penetration into rural areas. the reserve bank evolved in parallel with these socio economic developments. it took a leading role in designing and implementing policies for agricultural and industrial development and for laying the foundations for financial markets. some of today ’ s premier development and market institutions such as the national bank for agriculture and rural development ( nabard ), the industrial development bank of india ( idbi ) and the unit trust of india ( uti ) had their beginnings as specialized departments and divisions within the rbi. the

longer - term refinancing operations ( ltros ) to be allotted on 27 july, 31 august and 28 september 2011 as fixed rate tender procedures with full allotment. the rates in these three - month operations will be fixed at the average rate of the mros over the life of the respective ltro. as stated on previous occasions, the provision of liquidity and the allotment modes for refinancing operations will be adjusted when appropriate, taking into account the fact that all the non - standard measures taken during the period of acute financial market tensions are, by construction, temporary in nature. let me now explain our assessment in greater detail, starting with the economic analysis. in the first quarter of 2011, the euro area recorded strong real gdp growth of 0. 8 % quarteron - quarter, following the 0. 3 % increase of the fourth quarter of 2010. recent statistical releases and survey - based indicators point towards a continued expansion of economic activity in the euro area in the second quarter of this year, albeit at a slower pace. this easing reflects the fact that the strong growth in the first quarter was partly due to special factors, which will cease to play a role in the second quarter. hence, it is appropriate to look through such short - term volatility and to emphasise the positive underlying momentum of economic activity in the euro area. looking ahead, euro area exports should be supported by the ongoing expansion in the world economy. at the same time, taking into account the bis central bankers ’ speeches favourable level of business confidence in the euro area, private sector domestic demand should contribute increasingly to economic growth, benefiting from the still accommodative monetary policy stance and the measures adopted to improve the functioning of the financial system. however, activity is expected to continue to be dampened somewhat by the process of balance sheet adjustment in various sectors. this assessment is also reflected in the june 2011 eurosystem staff macroeconomic projections for the euro area, which foresee annual real gdp growth in a range between 1. 5 % and 2. 3 % in 2011 and between 0. 6 % and 2. 8 % in 2012. compared with the march 2011 ecb staff macroeconomic projections, the range for 2011 has been revised upwards, while the range for 2012 remains broadly unchanged. the june 2011 eurosystem staff projections are broadly in line with recent forecasts by international organisations. in the governing council ’ s assessment, the risks to this economic outlook remain broadly