HISTORY OF BANKING IN INDIA

History of Banking in India: Banking in India originated in the last decades of the 18th century. The first bank was the Bank of Hindustan, which was established in 1770 and liquidated in 1829–32.  General Bank of India was established in 1786 but failed in 1791.  The East India Company established The Bank of Bengal/Calcutta in 1809, Bank of Bombay in 1840 and Bank of Madras in 1843. These three banks Bank of Calcutta, Bank of Bombay, and Bank of Madras were called as Presidency Banks. Allahabad Bank which was established in 1865, was the first bank completely run by Indians and is still in existence. Punjab National Bank was set up in 1894 with headquarter in Lahore. Between 1906 and 1913, many banks like  Central Bank of India, Bank of Baroda, Bank of India, Canara Bank, Indian Bank, and Bank of Mysore were set up. In 1921, all presidency banks on the advice of J.M. Keynes were merged to form the Imperial Bank of India with the majority of shareholdings by European Shareholders.

The Reserve Bank of India (RBI) was established in April 1935 under RBI Act 1934. Between 1913 and 1948 there were approximately 1100 small banks in India. To monitor the functioning of commercial banks, the Government of India enacted Banking Regulation Act, 1949. Reserve Bank of India was vested with extensive powers for the supervision of banking in India as a Central Banking Authority.

After independence, In 1955, the Imperial Bank of India was nationalised and was given the name “State Bank of India”, to act as the principal agent of RBI and to handle banking transactions all over the country. It was established under State Bank of India Act, 1955. Seven banks forming subsidiary of State Bank of India was nationalised in 1960.

1.State Bank of Bikaner & Jaipur

2.State Bank of Hyderabad

3.State Bank of Indore

4.State Bank of Mysore

5.State Bank of Saurashtra

6.State Bank of Patiala

7.State Bank of Travancore

On 19th July 1969, major process of nationalisation was carried out. At the same time, 14 major Indian commercial banks of the country were nationalised. these were

1. Bank of India
2. Union Bank of India
3. Bank of Baroda
4. Bank of Maharashtra
5. Punjab National Bank
6. Indian Bank
7. Indian Overseas Bank
8. Central Bank of India
9. Canara Bank
10. Syndicate Bank
11. United Commercial Bank
12. Allahabad Bank
13. United Bank of India
14. Dena Bank

In 1980, another six banks were nationalised. these were

1. Andhra Bank
2. Corporation Bank
3 New Bank of India
4. Oriental Bank of Commerce
5. Punjab and Sindh Bank
6. Vijaya Bank

The following are the major steps taken by the Government of India to Regulate Banking institutions in the country:-

1934: Passing of RBI Act.

1935: RBI started operations.

1949: Enactment of Banking Regulation Act.

1955: Nationalisation of State Bank of India.

1959: Nationalisation of SBI subsidiaries.

1969: Nationalisation of 14  Banks.

1975: formation of regional rural banks.

1980: Nationalisation of another 6 banks