A Brahmin banker and a Muslim academic

CD Deshmukh, the third governor of the RBI, took the additional responsibilities of other countries very seriously, and went out of his way to safeguard Pakistan's interests

- G SREEKUMAR

CD DESHMUKH was the third governor of the Reserve Bank of India (RBI) and the first Indian to hold the position, from 1943 to 1948. It is less known that in 1947-48, the currency notes he signed were, with the probable exception of the British pound and the US dollar, legal tender in a maximum number of countries.

Besides India, these included neighbours such as Nepal and Bhutan, former British protectorates in the Gulf, including the Trucial States, Bahrain, Kuwait, and the Sultanate of Oman, as well as Burma (hived off from India in 1937), and Pakistan. He took these additional responsibilities very seriously. In particular, he went out of the way to safeguard Pakistan's interests.

The Pakistan (Monetary System and Reserve Bank) Order, issued on August 14, 1947—the day Pakistan became independent, made detailed arrangements for transferring the RBI's functions to a new central bank for Pakistan. The RBI would manage Pakistan's public debt and exchange control operations until March 31, 1948, and also remain the banker to the Pakistan government and have the sole right to issue currency notes until September 30, 1948.

Not long after Partition was announced, Deshmukh summoned a young Muslim officer from the bank's Department of Research and Statistics. Deshmukh established this star-studded department in 1945. He would establish a similar department in Delhi when he became finance minister, taking along a few from the RBI.