New Delhi: India is all set to celebrate its 75th Independence Day on August 15, 2021 amid the deadly COVID-19 pandemic. India received freedom from British colonial rule in 1947 after huge struggle and sacrifices. But do you know how India and Pakistan functioned immediately after partition? It must be noted that during partition, Pakistan didn’t have any central banking system. Soon after the independence, the partition between both the countries led to massive violence and that eventually resulted in the division of territories, powers and assets.Also Read - Pak PM Imran Khan Bats for Taliban, Says Incentivise Them on Women's Rights, Inclusive Govt
After Independence, both the countries had also to struggle over several issues such as currency and coinage, management of exchange and public debt, transfer of staff and property and division of profits, assets and liabilities. Also Read - Don't Need Lessons From 'Failed State': India Hits Out at Pak, OIC For Raising Kashmir Issue at UNHRC
At that time, the government of India had appointed a special committee of the cabinet “to examine the administrative consequences of partition and to take necessary steps for the transfer of power to the two Dominions”. Also Read - Afghanistan Women Football Team Escapes Taliban, Reaches Pakistan: Confirms Information Minister
As reported by Zee News, the Reserve Bank of India in that interim time was supplying currency to Pakistan and it acted as the central bank simultaneously till the State Bank of Pakistan was established.
Hence it must be understood that Pakistan used the Indian currency as its own and it had Government of Pakistan printed on it in English and Hakumat-e-Pakistan printed in Urdu on the white area of the note.
As per updates from the RBI documents, “Under the arrangements agreed upon, the Bank was to be the currency authority in Pakistan and banker to the Central and Provincial Governments in Pakistan till the end of September 1948. It was also required to manage Pakistan’s exchange control and public debt till the end of March 1948.”
The RBI documents further stated that the RBI was to have the sole right to issue notes in Pakistan up to September 30, 1948. “While India notes were to continue to remain legal tender in Pakistan up to September 30, 1948, the Order provided for the issue by the Bank, from April 1, 1948, of notes in Pakistan, carrying the inscription ‘Government of Pakistan’ in English and Urdu,” the document further added.
Later on, an agreement was made that the currency and coinage would remain common to both the territories up to March 31, 1948 and then in the next six months would be a transitional period which saw Pakistan overprinted notes in Pakistan areas but India notes which are already there in Pakistan would continue to remain legal tender there.