In the course of legislative developments in 1865, the foundation stone was laid for the Secretariat building by His Highness Ayilyam Thirunal Maharaja. The Secretariat began to function from 23rd August 1869. Earlier, the Secretariat was known as Huzur Cutchery, Public Office or Puthen Kacheri.

As part of the modernization of administration, in 1871, Col. Munro and Her Highness Rani Lakshmi Bai framed some of the major departments of the Secretariat like Finance, Revenue, Police etc. (The Secretariat came to be known as 'Government Secretariat' from 25th August 1949 by virtue of Circular no. M3-5412/49/CS). Since its formation in 1871, Finance Department plays a major role in governance.

Now, major responsibilities of Finance Department are derived from Articles 202 to 206 of the Constitution of India.

Framing of rules regulating the pay, leave and pension of persons in the service of the Government and rules regulating the number, gradings or cadre and emoluments of posts under the Government and also be responsible for seeing that these rules are properly applied.

Finance Department is responsible for all matters relative to financial procedure and the application of the principles of sound finance.

Advise on the financial aspect of all transactions relating to loans granted by the Government.

Safety and proper employment of Famine Relief Fund and other special funds, if any, and for the administration of Provident Funds, Deposits and Advances.

Examine and report on all proposals for the imposition, increase, reduction or abolition of taxes, duties, cesses or fees.

Examine and report on all proposals for borrowing or giving of a guarantee by the Government and raise such loans as have been duly authorised, Finance Department shall be in charge of all matters relating to the service of loans or the discharge of guarantees.

Ensure that proper financial rules are framed for the guidance of other departments and that suitable accounts, including commercial accounts, whatever necessary, are maintained by other departments and establishments subordinate to them.

Prepare an estimate of the total receipts and disbursements of the State in each year and watching the state Government's balances and for their ways and means operations.

Preparation of Budgets and supplementary estimates.

Advise departments responsible for the collection of revenue regarding the progress of collection and methods of collection employed