History of Banking System in India and Establishment of Banks

History of Banking sytem in India :

In the history of India Banking system in India was started from 18th century.The first modern banking started in India is "Bank of hindustan" started by the English agency "House of Alexander & co" in kolkatha in 1770 but later it was closed in 1832 for some reasons.After in 1786 "General Bank of India" was started and failed in 1791.

Evolution of Banking system :

Phase I  :  Early Phase - 1770 to 1969

Phase II  :  Nationalisation - 1969 to 1991

Phase III  :  Banking Sector Reforms - 1991

History of Presidency Bank :

These Presidency banks were funded by presidency government at that time.The Three Presidency government at that time were

• Bank of Bengal  -  Established in 1806
• Bank of Bombay  -  Established in 1840
• Bank of Madras  -  Established in 1843

These three presidency banks were reorganized and amalgamated to form a single entity named "Imperial Bank of India" on 27th january,1927 it was later transformed into "State Bank of India" in 1955.

History of some old Banks :

Allahabad Bank was established in 1865 at allahabad(Uttar Pardesh).It is the oldest joint stock bank of our country and it was funtioning in our country till today.

Oudh Commercial Bank was established in 1881 at faizabad(Uttar Pardesh). It was the first limited liabilty Bank in India and also first joint stock bank by Indians. However it failed in 1958.

Punjab National Bank was established in 1895 at lahore (Pakistan) and it was also the first bank to be solely managed by Indians.

History of establishing New Banks :

Many banks were established between 1906 to 1911due to the Impact of the "Swadeshi" movement. Many local bussiness man and strong political figures of India funded these banks for the Indian community.

• Canara Bank established in 1906
• Bank of India established in 1906
• Corporation bank established in 1906
• Indian Bank established in 1907
• Bank of Baroda established in 1908

History of "The Reserve Bank Of India" :

• The Resrve Bank of India was established on 1st April,1935 in accordance with the provisions of the RBI act 1934.
• It was established under the recommendation of the "Hilton Young Commision" also known as the "Royal commision on Indian Currency and Finance".
• Initially it was setup in Calcutta and permanently moved to Mumbai in 1937.
• Initially the RBI was started with private share holder's fully paid up capital of Rs.5 crores.
• It aslo acted as Central Banking Intitute for Mynmar till 1948 and till 1947 for the pakistan.
• The RBI was nationalised on the 1st January 1949 in accordance with RBI (Transfer to Public Ownership) act 1948.
• It empoered RBI to act as central banking Institution to control monetary policy of Indian Rupee and to control,Regulate,Monitor,Inspect banks in the country as Mentioned in the second schedule of the RBI act 1934.

Subsidiaries of RBI :

• Deposit Insurance and Credit Gaurantee Corporation (DICGC) was setup in 1978.
• National Agriculture and Rural Developement Bank (NABARD) was setup in 1982.
• National Housing Bank was setup on 1988.
• Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL) was setup in 1995.

History of State Bank of India :

• The State Bank of India was formerly known as the "Imperial Bank of India" during the british rule.
• It was established on 1st july,1955 under the recommendation of "Gorwala Commitee".
• It was Nationalised on 2nd June,1956 with majority of its share taken by the Government of India.
• The SBI acts as an agent where the Reserve Bank of India have no branch offices.
• It has five associate banks, State bank of Bikaner & Jaipur, Hyderabad, Mysore, Patiala and Travancore.