Question

Reserve Bank of India came into existence on April 1, 1935 on the recommendation of:

• A. Royal Commission
• B. Finance Commission of India
• C. Hilton Young Commission
• D. Kothari Commission

Hint:

The Royal Commission on Indian Currency and Finance (1926) is the official name of the Hilton Young Commission, which recommended the creation of the RBI.

Answer 1

The Correct Option is C

Step 1: Understanding the Concept:
The Reserve Bank of India (RBI) was established to regulate the issue of banknotes, maintain reserves to secure monetary stability, and operate the currency and credit system of the country.

Step 2: Detailed Explanation:
- In 1926, the Royal Commission on Indian Currency and Finance, popularly known as the Hilton Young Commission (chaired by Edward Hilton Young), recommended the creation of a central bank to separate the control of currency and credit from the government.
- This recommendation led to the drafting and passing of the Reserve Bank of India Act, 1934.
- Consequently, the RBI commenced its operations on April 1, 1935, as a private shareholders' bank with a paid-up capital of five crore rupees, before being nationalized in 1949.
- Other options like the Finance Commission (constituted post-independence under Article 280) and the Kothari Commission (education reforms, 1964-66) are unrelated to the establishment of the central bank.

Step 3: Final Answer:
Therefore, the RBI was established based on the recommendations of the Hilton Young Commission.