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History of Banking in India






Today, Banks are offering modern facilities like e-banking, Bill of payment,Remittance etc have gone under various cuts and knifes till date. The today's scenario is totally different from the time when banks were newly set up. Indians never believed to deposit their precious wealth as Britisher empowerment subsist that time. This was the basic reason why banking system did not gain its stable position in India before Independence.

Journey of Banks starts with....

Establishment of Banking system in India

Under European rule, the foundation stone of Banking system was laid in 1770 with the establishment of "Bank of Hindustan" at Calcutta.This was first bank in India under the rule of Britishers, the reason not been trusted by Indian.

The journey of Indian Banking system can be read under three phases:
  • Phase I - Introduction of Banking system from 1786 to 1969.
  • Phase II -Indian Banks Nationalization and Indian banking sector rejuvenates.
  • Phase III- Modern age of banking introduced.


Lets begin with....

Phase I

In 1786, "The General Bank of India" was set up after the liquidation of "Bank of Hindustan". At last, it also failed to gain its importance and folded up in 1791.

Then, The East India Company decided to establish three banks named as:

These three banks were bankrolled by Presidency Government and finally merged to make one called "Imperial Bank of India" in 1921. "Imperial" word shows royalty and monarchy system which was replaced with "State Bank of India" after getting Independence in 1955.


List of Banks introduced during Phase I

:
Meanwhile, in 1927, A Royal Commission or Hilton Young Commission was laid on Indian currency and Finance whose chairman was "Edward Hilton Young" recommended to pass RBI Act 1934 in the year 1934. Under this act, "Reserve Bank of India" established in 1935.Osborne Smith became the first and last Britisher Governor of RBI who ruled for two years from 1 April 1935 to 30 June 1937.

Banking Regulation Act 1949

At the initial age, Banks used to govern under Companies. But after independence, On 10th March, 1949 "Banking companies Act 1949" was laid down to implement and improve the law related to Banking companies. Act was formed to protect the interest of investors and mainly the economic interest of India. Terminology was modified on Ist March 1966 and named as 'Banking Regulation Act 1949' applicable to all types of Banks.

Phase II

In this phase, Indian Government made several moves in the advancement of Banks. SBI made the main agent of RBI as to deal with financial affairs of Union and State Government in India.
In the Year 1960- Nationalization of seven Banks as subsidiary of State of India.

In the year 1980- Nationalization of more six banks with the deposits over 200 crore under Indian Banking Sector Reforms that contributed 80% of banking sector in Government control.

Basic Objective of nationalization were to mobilize money in urban and rural sector as well as break the chain of dominance of big industrialists since, a dream to acquire strong economy of India.

Phase III

This phase bring the modern age of banking before the Hi-tech world. With the First step in 1991, M Narasimham Committee was setup that change the means of banking by providing tons of advanced facilities and modern techniques.

In 1987 ATM station launched at Mumbai by HSBC. In the year 1858 Standard Chartered bank, first foreign bank set up in India. Phone Banking, Internet Banking and lots more introduced to ease customer and make the entire banking process swift.

Now a days, Time is more precious than money and in this quite busy scheduled life doing transaction, get account detials, paying bills, recharge your phone, paying EMI monthly etc while working in office are just a few clicks away....
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