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

fairly. importantly, the rbi has had a decisive influence in shaping and implementing every major economic policy in the monetary and financial sectors. the developmental role of the rbi has expanded too. among our major endeavours today are financial inclusion and the strengthening of the credit delivery mechanisms for agriculture, and small and microenterprises, specially in the rural areas. with india emerging as a key player in the global growth story, rbi ’ s role and responsibilities too have increasingly acquired an international dimension. today rbi is an active participant in several important international institutions that seek to promote more effective regulatory structures and financial and systemic stability. we have for sometime now been shareholders of the bank for international settlements ( bis ) and member of the committee on global financial system, the markets committee, and the international liaison group under the aegis of the basel committee on banking supervision ( bcbs ), and are now becoming active members of the financial stability forum and the bcbs. the large and diverse responsibilities of the bank demand vastly different resources in terms of infrastructure and human competencies. in fact, as our mandate has evolved and grown, our resources and the organization of these resources too have undergone significant changes. the bank recognizes that our employees are our main assets and that the efficacy of an institution is fundamentally dependent not just on the sum total of its individual human capital, but on how effectively it is able to draw out the best from its talent pool. it has been our constant endeavour to create a work environment where we can deliver our services efficiently, discharge our functions competently and enjoy a wholesome work - life balance. as i had mentioned to you in my new year message, today the economy is facing an extraordinary challenge. the global recession, a fall - out of the unprecedented financial crisis, is the most serious economic problem that the world has faced in the post - war era. contrary to earlier hopes, it is now clear that the downturn will be deeper and the recovery longer than we had earlier anticipated. the reserve bank has played, and will continue to play, a leading role in managing the crisis and minimizing the pain of adjustment. this affords the rbi both a challenge and an opportunity. a challenge because a lot is expected of us ; and an opportunity because it gives us a chance to demonstrate that we can rise to the occasion, think out of the box, lead from the front and act swiftly and effectively. in the course of the next one month, we will be working out a detailed plan for