Today, Banks are offering modern facilities like e-banking, Bill of payment, Remittance, etc have gone under various cuts and knives to date. 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 the banking system did not gain its stable position in India before Independence. The journey of Banks starts with....
Establishment of Banking system in India
Under European rule, the foundation stone of the Banking system was laid in 1770 with the establishment of "Bank of Hindustan" at Calcutta. This was the first bank in India under the rule of Britishers, the reason not been trusted by Indians. The journey of the Indian Banking system can be read under three phases:
- Phase I - Introduction of the Banking system from 1786 to 1969.
- Phase II -Indian Banks Nationalization and Indian banking sector rejuvenate.
- Phase III- Modern age of banking introduced.
Lets begin with....
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
- In 1865 Allahabad Bank established and governed by Indians. Headquarter at Allahabad.
- In 1894 Punjab National Bank Ltd.. Headquarter at Lahore.
- In 1906 Bank of India. Headquarter at Mumbai.
- In 1906 Canara Bank. Headquarter at Banglore.
- In 1907 Indian Bank. Headquarter at Madras.
- In 1908 Bank of Baroda. Headquarter at Vadodara.
- In 1911 Central Bank of India. Headquarter at Mumbai.
- In 1913 State Bank of Mysore. Headquarter at Banglore.
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, the "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. The 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 the 'Banking Regulation Act 1949' applicable to all types of Banks.
In this phase, the Indian Government made several moves in the advancement of Banks. SBI made the main agent of RBI as to deal with the financial affairs of the Union and State Government in India. In the Year 1960- Nationalization of seven Banks as a subsidiary of the State of India. In the year 1980- The nationalization of more six banks with deposits over 200 crores under Indian Banking Sector Reforms contributed 80% of the banking sector in Government control. The basic Objective of nationalization was to mobilize money in the urban and rural sectors as well as break the chain of the dominance of big industrialists since, a dream to acquire strong economy of India.
This phase brings the modern age of banking before the Hi-tech world. With the First step in 1991, M Narasimham Committee was setup that changes 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, the first foreign bank set up in India. Phone Banking, Internet Banking, and lots more introduced to ease customers and make the entire banking process swift. Nowadays, Time is more precious than money and in this quite busy scheduled life doing a transaction, get account details, paying bills, recharge your phone, paying EMI monthly, etc while working in the office is just a few clicks away....