Answers to RBI Quiz 2021

Dear Friends

Once again, Season’s Greetings and best wishes for a happy new year!

Answers to RBI Quiz 2021

The answers to the quiz posted last week on another blog are given below. The complete answers with more detail and images have since been posted on the blog here:

https://tigerandpalmtree.com/rbi-quiz-2021-answers/

Shorter answers with no images are given below:

1.     He was considered for the post of Deputy Governor, Reserve Bank of India, but overlooked for being politically ambitious. Later, he became India’s Finance Minister. Who was he?

R.K. Shanmugham Chetty was among the few names considered for one of the two positions of Deputy Governor. Sir James Taylor had already been identified for the first post. The rather mercurial Sir James Grigg, then Finance Member on the Viceroy’s Executive Council, wrote to Findlater Stewart at the India Office, London, as follows:

“I don't care for Chetty and I don't want him as Deputy governor of the Reserve Bank because he is too ambitious and political - and moreover he is unsound both on the rupee ratio and on protection.”

Chetty, instead, became Dewan of Cochin State. He remained there for long, had his clashes with the Dewan of the neighbouring Travancore, Sir C.P. Ramaswamy Iyer. He remained in Cochin till 1941, later even attending the Bretton Woods Conference as a member of the Indian delegation. Shanmugham Road, a major avenue in Cochin, now Kochi, is named after Chetty.

Subsequently, Chetty became the first Finance Minister of Independent India and presented India’s first budget in November 1947. He resigned a year later in the light of allegations of interference in some tax-related investigations. M.O. Mathai, Nehru's Secretary, gives a version of this in his Reminiscences. But, perhaps, Mathai's is not the last word on the subject. See this article by S. Muthiah, the late historian of Madras.

2.     Ironically, as struck me recently, the Deputy Governor selected in place of the above was the first to occupy an elected position. He left the Bank to head his party and later his State. Name him. There will be separate posts on both soon.

Sir Sikander Hayat Khan became the second Deputy Governor. Already Sir James Taylor had been identified earlier. Khan resigned a few months into his tenure and later headed the Unionist Party which was opposed to the Muslim League led by Jinnah and Iqbal. After the elections of 1937, he became Premier of Punjab and continued in that position until he passed away during the night of 25/26 December 1942.

3.     Among all the Governors so far, who was the only one to have died in office? A separate post on this Governor is due.

Sir James Braid Taylor, the second Governor of the Reserve Bank of India, was the only Governor to die in office. He passed away on 17 February 1943 after a brief illness diagnosed as coronary thrombosis. Deshmukh wrote about it in his memoirs. Both had gone to New Delhi for a meeting and stayed at the residence of Sir Jeremy Raisman, the Finance Member, as his guest. Taylor returned a few days after Deshmukh. The day he came to the office, he walked into Deshmukh’s office and told him that he was leaving early as he was not feeling well. He never returned.

4.     Which Indian College, perhaps the only one (I will be happy to be corrected), produced three Reserve Bank Governors? I had commented earlier on this while writing on a completely unrelated subject.

Presidency College, Madras (Chennai). The three Governors from the College are Sir Benegal Rama Rau, S. Jagannathan, and M. Narasimham. I referred to the College in my articles on the Benegal Brothers and the Victoria Students Hostel.

The Presidency College, Madras, was also until recently the only college in India to have produced two Nobel Laureates. But, the College also has, as an alumnus, S.R. Srinivasa Varadhan, winner of the Abel Prize, widely considered to be the mathematics equivalent of the Nobel (notwithstanding claims from the Fields Medal limited to those below 40).

A doubt that arose while writing this was whether Presidency College Calcutta (now Presidency University) also had three (or perhaps more) Governors among its alumni: P.C. Bhattacharya, Amitabh Ghosh, and Bimal Jalan? We know that Bimal Jalan studied there. But, there is no publicly available information on the other two. Can someone throw light on this?

5.     No Kashmiri has as yet become the Governor of the Reserve Bank of India. But, which Governor of the Bank was married to a Kashmiri, who was famous in her own right? Soon, I will have a separate post on her.

Sir Benegal Rama Rau married Dhanvanthi, daughter of Bhagbhari Handoo, an official with the Southern Mahratta Railways, headquartered in Dharwar. Dhan to family and friends, she grew up in a Railway Colony in the outskirts of nearby Hubli. She was one among the few girl students at the Presidency College and later taught at nearby Queen Mary's College after undergoing training at the Teacher's College, Saidapet.

The marriage followed a chance meeting between the parents at the Saraswat Club in Madras, maybe the present Kanara Saraswat Association in Kilpauk. During the meeting, the two shared their angst at their son/daughter not getting married. Rama Rau was insisting that marriages should take place between communities so that old customs and rituals could be wiped out. Dr. Raghavendra Rao, Rama Rau's father, asked Mr. Handoo "shouldn't the unconventional son and the unusual daughter be given an opportunity to meet?" The meeting ended in marriage in 1919. He was 30, and she was nearly 26, both very late by the norms of the day.

The marriage was low-key for more reasons than one. The family had lost Dhanvanthi's elder brother, Bali, a doctor in Sheffield, to the flu pandemic of 1918/19. The second brother, Ram, who was called to the bar, was marrying a Belgian girl. Moreover, Dhanvanthi insisted on civil marriage. In those days, this required that both not belong to a recognized religion. Dhanvanthi was willing to give a declaration to the effect. Rama Rau, a Theosophist, readily agreed. As it turned out, it would become the first registered Kashmiri marriage. It was boycotted by most relatives as Dhan was marrying a non-Kashmiri.

Dhanvanthi went through the marriage and honeymoon in Ootacamund with an injured and swollen foot. Food was delivered in the room, but Rama Rau sometimes chose to go to the dining room. As Dhanvanthi wrote:

“My husband either ate with me or went out into the dining room alone, but made no friends. He went for long walks though he did not encourage me to limp out of my room or meet any of our fellow guests in the hotel. I did not know him well enough to ask questions, but got the impression that he was rather shy about having a wife, particularly of being seen helping me to move about in public.”

I will post separately on this interesting event from the life of Rama Rau.

6.     When Mario Draghi became Prime Minister of Italy earlier this year, he was not the first central bank Governor to lead his country. Nor was Manmohan Singh the first. The credit, I believe, goes to this quiet and self-effacing gentleman who incidentally I had the pleasure of meeting once. Name him and the country. (I will be happy to be informed of other instances).

Note: The question and answer need to change. I have since come to know that Nikolai Bulganin, Premier of Russia from 1955 to 1958, headed the central bank of Russia, then known as Gosbank, for three terms.

This is admittedly not an RBI matter. But, it came about as many I know think that Manmohan Singh’s was the only incident before Draghi.

Josef Tošovský headed the central bank of Czechoslovakia from December 1989 to November 2000. During this period, the name of the central bank also changed from the Soviet-era State Bank of Czechoslovakia to the post-Soviet Czech National Bank (CNB). The CNB has had a chequered history from being probably the first central bank established after the First World War to German Occupation to nationalisation to a post-Soviet era.

Under certain circumstances, Tošovský was designated Prime Minister in December 1997 and remained in that position till July the following year. In December 2000, Tošovský became Chairman of the Financial Stability Institute at the Bank for International Settlements, Basel, Switzerland. He continued in that position till December 2016.

7.     Before Benegal Rama Rau succeeded C.D. Deshmukh as Governor, Reserve Bank of India, he was an understudy to Deshmukh for some time. He also, in a sense, reported to Deshmukh who became the Finance Minister. This, in my view, was an unusual arrangement, telling on the character of Rama Rau. What was unusual about it? I will elaborate more in my separate post on Rama Rau.

In the Indian Civil Service, Rama Rau was senior to Deshmukh by six years. Even today, a one-year difference in seniority in the administrative service is a big deal. In those days, in the ICS, six years was huge. What is more, Rama Rau joined the service before the War, and Deshmukh after the War and the M-C Reforms, making the difference generational. That Rama Rau agreed to the arrangement shows his humility. As he would be reporting to someone who was once his junior, his consent was apparently sought before his appointment, and he agreed. When you look at the big picture, I feel Rama Rau got a raw deal though he still has the longest tenure as Governor, Reserve Bank of India. I will write more on that later.

8.     Which famous civil servant refused Governorship of the Reserve Bank of India on the grounds that he did not want to be ordered about by his juniors? Maybe he was exaggerating, as the Reserve Bank of India’s official history claims, or justifies. But, if I remember correctly, he had direct experience in this regard.

Brij Kumar Nehru, who was a second cousin of then Prime Minister Indira Gandhi. His paternal grandfather was the elder brother of Motilal Nehru. He wrote in his memoirs, Nice Guys Finish Second:

“The reason why I had so far refused was the lack of independence of the Governor. I explained to him that the great battle between TTK and Rama Rao, which the latter lost, had made it clear that the Governor was a subordinate of the Ministry of Finance. Even as Joint Secretary, I used to issue orders to the Reserve Bank. I did not cherish the idea of my juniors ordering me about.”

The Bank’s official history explained:

“But it is easy to exaggerate the problem. The truth is that, for the most part, the Bank and the Ministry worked well together. Such differences as arose were inevitable and can be seen in all countries.”

- History of Reserve Bank of India, Volume 3, p. 12

9.     Durgabai Deshmukh, wife of C.D. Deshmukh, wrote her memoirs in the 1970s, as did Deshmukh. What was the title of her memoirs?

Chintaman and I. A minor correction in the question is due. The book was written in the late 1970s, but published in either 1980 or 1981. She passed away in 1981, and Deshmukh the following year.

10.  Who is the youngest Deputy Governor of the Reserve Bank of India to date? What was he before joining the Bank?

R.K. Hazari. He was editor of the Economic and Political Weekly. He became Deputy Governor at the age of 37 in 1969 and continued in that position till 1977.

11.  Perhaps the closest friend of C.D. Deshmukh in the ICS was N.R. Pillai, the first Cabinet Secretary. As Finance Minister, Deshmukh considered making him a Governor of the Reserve Bank. Apart from being from the same cadre of Central Provinces and Berar, what other unusual fact brought them closer?

They were among the few Indian civil servants who had British wives. Another one was Abdullah Yusuf Ali (he had two in succession) about whom I had written earlier. B.K. Nehru had an Austro-Hungarian wife.

12.  Seven Governors of the Reserve Bank of India had signed one rupee note as Finance Secretary before they became Governor. Who was the only one to have signed a one rupee note after his tenure as Governor?

M. Narasimham. He was the only one to move from the post of Governor to later become Finance Secretary.

13.  Which Reserve Bank Governor started his career as a “demon,” as they were referred to colloquially, and in jest.

I admit this was a nasty one. Because there is no information in the public domain. Handed down by word of mouth, S. Venkitaramanan started his career in the Physics Department of University College, Trivandrum, as a “demonstrator,” not so affectionately referred to as “demons.” Only the best students had this honour. And Ramanan, as he was known to friends, was a topper all along, from the 7th standard public examination to ESLC (English School Leaving Certificate), Intermediate, B.Sc. Physics, and the IAS, in every subject, and in aggregate, and also extracurricular activities (except perhaps just once).

I owe this piece of information to P.R. Rajashekharan Nayar, my former boss in my early days of banking regulation and supervision. Nayar Saab to admiring co-workers, he was a contemporary of Venkitaramanan at the University College, Trivandrum. A legendary inspecting officer in his time, Nayar was the first employee of the Trivandrum Office. He retired in 1993 as General Manager (or Joint Chief Officer as they were known then) after working for nearly four decades in banking supervision. His period saw the rationalisation of banking in Kerala from 200 plus banks when Palai Central Bank failed in 1960 to just 12 a decade later.

To my knowledge, Nayar’s inspection report on Indian Bank for the year 1988-89 was the first and perhaps still the only report to have received a letter of appreciation. That his warning signals were largely ignored and what came about a few years later as the biggest loss in the history of Indian banking should have earned its rightful place in history.

Nayar’s inspection skills so greatly impressed S. Padmanabhan (of Padmanabhan Committee fame), the then CMD of Indian Overseas Bank, and former MD/DMD of SBI, that he sought Nayar’s services on deputation for almost a year to carry out an audit of the bank’s branches in Hong Kong and Singapore. These countries did not then allow foreign regulators to inspect bank branches in their jurisdiction.

Nayar was among the ablest General Managers I had worked with, definitely the most admired. To such great bosses and their quiet and unobtrusive mentoring, without the brouhaha that now surrounds it, I owe whatever I achieved in my career. I feel that the Bank’s history would be incomplete without the stories of many like Nayar. They are its forgotten soldiers, who by virtue of not having joined the Bank at a higher level did not rise high enough. Nevertheless, their contribution to its reputation has been no less than any other. More on Nayar and the Trivandrum Office in a future post.

14.  Who was the only Governor of the Reserve Bank of India from the Indian Audit and Accounts Service?

Paresh Chandra Bhattacharya. He was Chairman of the State Bank of India before he became Governor in 1962. His period saw the establishment of Unit Trust of India and IDBI, and the infamous 57% devaluation of the rupee on that dreaded day of 6/6/66.

Bhattacharya studied at the University of Calcutta. But the university then had a wide reach cutting across provinces. Did he also study Economics? Was this also at the Presidency College? Wikipedia says he was from Bengal. But, someone told me many years back that he was from Tripura. Could someone please clarify?

15.  Who was the first professional economist to become the Governor of the Reserve Bank? I was wrong on this for a long time.

B.N. Adarkar was the first professional economist. He succeeded L.K. Jha and had the second shortest tenure as Governor.

L.K. Jha was, to the best of my knowledge, the first Governor to have graduated in Economics. He did so at Cambridge University. But, he chose to become a civil servant rather than a professional economist. For a long time, I had thought that Dr. I.G. Patel was the first economist Governor. In fact, even M. Narasimham, another professional economist, preceded him.

16.  Which Deputy Governor of the Reserve Bank of India was the first from a commercial bank, and in which year?

Amitabh Ghosh. He was Chairman and Managing Director of Allahabad Bank. He was in office from 1982 to 1992.

Apart from Ghosh, who was Governor for 20 days, three other Governors also came from a commercial bank. These were Osborne Smith, HVR Iengar (without a “y” please), and P.C. Bhattacharya. Of these, only Smith was a commercial banker. The other two, from the ICS and the IA&AS, had brief stints as the second and third Chairmen of the State Bank of India before coming to the Reserve Bank.

17.  Which Reserve Bank Governor started his career at the ICICI?

Bimal Jalan. He studied at the Presidency College, Calcutta, under the likes of Amiya Bagchi, Tapas Mazumdar, Dipak Banerjee, and Mihir Rakshit. After studying at Oxford and Cambridge, he was with ICICI (the financial institution) for a brief period before becoming an Economic Adviser to the Government of India.

18.  Apart from Issue and Banking Departments, which another Department was specifically mandated under the Reserve Bank of India Act, 1934? The Act was following which country’s example?

Agricultural Credit Department. The proposal was modelled after the Rural Credit Department of the Commonwealth Bank of Australia, which was then performing Australia’s central banking functions. During the discussion on the bill in the Joint Select Committee, the suggestion came as an amendment by a private member from then Madras, B. Sitaramaraju. Though the Finance Member opposed it saying that it was not a success even in a much less populated Australia, the suggestion was supported by all others. Incidentally, in 1998, the Reserve Bank of Australia, which had by then taken over the central banking functions, discontinued this department and function.

19.  This Reserve Bank Governor was a former student of Harold Laski. Name him.

Laxmi Kant Jha was a student of Laski at the London School of Economics. This is based on publicly available information and I would be glad to have a confirmation from another source too.

Before that, Jha was at Cambridge University where he studied Economics. As he was at Trinity College, he did not actually study under Keynes who was at King’s College.

20.  Which ‘star pupil’ of John Keynes was the first professional economist at the Reserve Bank of India, and later its first Economic Adviser?

J.V. Joshi. This was what the RBI History, Volume 1, writes on the matter:

“In the middle of 1943, the Research Section was expanded for undertaking a fuller study of problems of central banking and wartime fiscal and monetary developments as a background to the proper consideration of questions like controls, planning for reconstruction and development and international currency and exchange arrangements that were likely to arise in the post-war period. Towards the end of that year, the Bank arranged to obtain the services of Mr. J. V. Joshi, the Deputy Economic Adviser to the Government of India, on loan as Senior Economist for the purpose not only of advising the Bank on economic matters including currency and central banking, but also for reviewing and suggesting improvements to the existing machinery for collection’ and coordination of economic intelligence; Mr. Joshi was later to become the Bank’s first Economic Adviser. Mr. Joshi served the Bank for over a decade. After a four-month spell as Deputy Governor, in a leave vacancy in the latter half of 1952, Mr. Joshi worked as an Executive Director for two years, retiring in January 1955.”

Winners of Quiz

The following are the winners of the quiz, one mark separating them:

1. Dr. Amol Agrawal, Asst. Professor, Ahmedabad University, avid blogger and commentator on banking history and contemporary banking issues. I have been following his hugely informative blog for close to two decades now.

2. Dr. Niranjan Rajadhyaksha, columnist, and former executive editor of Mint. He is also the Research Director and Senior Fellow at IDFC Institute, and a member of the academic board of the Meghnad Desai Academy of Economics.

Full marks were given even when correct answers had a question mark next to them. Half marks were given when only one part of the question was answered (I will hereafter avoid different parts to a question). But for that, both would have perhaps been equal. I thank them for participating in the quiz. I have mailed them soft copies of Kanchan Bannerjee’s The Benegal Brothers - The Story of a Family and its Times 1864-1975 as a token of appreciation.

Going forward

I received feedback from some that I have been posting more than they can catch up with. Some others had already read some of the posts on my blogs which I have been reposting here. Combining three articles in one post also results in some being overlooked. So, starting next week, in the new year,

• There will be only one mail per week as hitherto.

• There will be only one link per mail/post.

• I might have more than one post per week but will not send emails for each post.

• Articles already on my other blogs will not be reposted here.

• My articles published in the media may be posted on Substack in a draft or enlarged version, but there will be no separate emails for them.

In other words, there will be only one mail per week, it will have only one link, and it will be a post not published elsewhere earlier.