The history of banking in India is a fascinating journey that reflects the country’s economic evolution. From ancient practices like usury to the modern digital banking era, the Indian banking system has undergone significant transformations. This article provides an in-depth overview of the key milestones in the history of banking in India, organized for easy reference and optimized for competitive exam preparation.
Key Phases in the History of Banking in India
| Phase | Time Period | Key Features |
|---|---|---|
| Ancient and Medieval Era | Pre-18th Century | – Practices like usury (mentioned in Vedas, Sutras, and Jatakas). – Use of instruments like adesha and hundis. |
| Early Modern Phase | 1770-1947 | – Establishment of first banks like Bank of Hindustan (1770) and General Bank of India (1786). – Presidency Banks (Bank of Bengal, Bank of Bombay, Bank of Madras) formed by the East India Company. – Imperial Bank of India created in 1921 by merging Presidency Banks. |
| Post-Independence Era | 1947-1969 | – Formation of Reserve Bank of India (RBI) in 1935. – Focus on expanding rural banking and financial inclusion. – Establishment of State Bank of India (SBI) in 1955. |
| Nationalization Phase | 1969-1991 | – Nationalization of 14 major banks in 1969. – Another 6 banks nationalized in 1980. – Emphasis on social banking and rural development. |
| Liberalization & Reforms | 1991-Present | – Introduction of private sector banks like ICICI and HDFC. – Digital banking revolution with UPI, internet banking, and mobile apps. – Implementation of Basel norms for financial stability. |
Detailed Timeline
Ancient Era
Usury was practiced as early as the Vedic period.
Instruments like adesha (modern bill of exchange) were used during the Mauryan period.
Hundis, a credit instrument, became prominent during the Mughal era.
Pre-Independence Phase
Banking Beginnings (1770-1832)
Bank of Hindustan (1770): First bank established but ceased operations by 1832.
General Bank of India (1786): Short-lived due to lack of financial stability.
Presidency Banks Era (1806-1921)
Bank of Bengal (1806), Bank of Bombay (1840), and Bank of Madras (1843) were established under East India Company.
Merged to form the Imperial Bank of India in 1921.
Swadeshi Movement Impact (1906-1913)
Indigenous banks like Punjab National Bank (1894), Central Bank of India (1911), and Canara Bank emerged.
Post-Independence Phase
Formation of RBI in 1935 as India’s central bank.
Establishment of SBI in 1955 by nationalizing Imperial Bank.
Nationalization Era
In 1969, 14 major commercial banks were nationalized to align banking with socio-economic goals.
In 1980, six more banks were nationalized.
Liberalization & Modern Reforms
Economic reforms initiated in 1991 opened doors for private sector banks.
Introduction of digital payment systems like UPI and NEFT revolutionized banking.
Major Milestones
| Year/Period | Event |
|---|---|
| 1770 | Establishment of Bank of Hindustan, India’s first bank. |
| 1935 | Formation of Reserve Bank of India as the central regulatory authority. |
| 1955 | Nationalization and rebranding of Imperial Bank as State Bank of India. |
| 1969 | Nationalization of 14 major commercial banks by the Indian government. |
| 1991 | Economic liberalization introduced private sector participation in banking. |
| Present | Rise of digital banking with UPI, mobile apps, and internet banking. |
Important Facts for Exams
The oldest surviving bank: State Bank of India (established as Bank of Calcutta in 1806).
First Indian-owned bank: Allahabad Bank (1865).
Father of Banking Reforms: Maidavolu Narasimham for his role during liberalization.
Key Acts: Banking Regulation Act, 1949; Companies Act, 1956.
This structured article is designed to provide clarity and assist aspirants preparing for exams like UPSC, SSC, RBI Grade B, and other competitive tests focusing on India’s economic history.
