History of Indian banking, Originally banks have never been the part of the Indian financial system. Before the genesis, private financers commonly known as “SAHUKARAS” money lender were there. Who use to provide financial help to people in return for huge interest. After winning Battle Plessey and Battle of Buxar, the influence of East India Company and Britishers starts growing. Gradually they took over a major part of Eastern India. With them, they also felt the need of banks as they were making a huge profit and needed someplace to store that profit.
For the first time in 1770 AD Bank of Hindustan
Establish by the agency house of Alexander and Company. But dysfunctional in the year 1832.
Another bank opened in the year 1786 AD
General bank of India
Another colonial bank but also closed down soon enough.
In 1809 Bank of Calcutta opened in Calcutta (now Kolkata) whose name later changed to the bank of Bengal. later Bank of Bombay and
Bank of Madras followed.
Till 1861 they performed several which most importantly include PRINTING OF NOTES.
Allahabad bank (1865)
First bank full governed and run by Indian
After 1857 revolt company rule ended in India and the British directly took over the control. With this area under British government also increased and felt the need of bank under single ownership. They finally decide to merge the bank operable at that time under them that is
Bank of Bengal, Bank of Bombay, and Bank of Madras
into
Imperial Bank of India
in the year 1921.
which after Independence in 1955 nationalized and become
STATE BANK OF INDIA
Due to the absence of any regulating body at that time anyone can open the bank under Company Act. Because of it till 1930, 1200 banks were running in the country.
1929 The great depression happened in America cause looses for the bank owners in India as well. And they stopped operations in India. British Government ruling in India felt the shock of economic wealth.
They felt the need of Regulating body that will look at whether one is capable of running a bank or not. And do all the work from giving license to managing them.
And in the year 1934 AD
passed the RBI ACT
And started working in the year 1934 as regulating the body and started a new chapter in the history of the indian banking system.