History of Banking In India

Banking Awareness

  • The significance of banking in our day to day life is being felt increasingly. What are the institutions, so inevitable in the present day set up? How do they transact? How did the concept emerge?
  • In this article we’ll, explore the birth of this flourishing industry.

History of Indian Banking System

India has a long history of financial intermediate. A type of business organization recognizable as managing agency houses took form in period from 1834 to 1847. Earliest of these was Hindustan Bank, established by one of the agency houses in Calcutta in 1770. Banking in India originated in the last decades of the 18th century.

The first banks were,

S. No
1 1786 The General Bank of India
2 1790 Bank of Hindustan

But both are not in existence now.

The East India Company established,

S. no
1 1809 Bank of Bengal/Calcutta
2 1840 Bank of Bombay
3 1843 Bank of Madras

These three individual units were called as Presidency Banks.

The other banks during this period were,

S. no
1 1865 Allahabad Bank
2 1894 Punjab National Bank
3 Between 1906 and 1913 Bank of India, Central Bank of India, Bank of Baroda, Canara Bank, Indian Bank, Indian Bank and Bank of Mysore
  • In 1921, all presidency banks were amalgamated to form the Imperial Bank of India, was run by European shareholders.
  • The Reserve Bank of India (RBI) was established on 1st April 1935, in accordance with the Reserve Bank of India Act, 1934.
  • After independence, the Government of India came up with the Banking Companies Act, 1949 later changed to Banking Regulation Act 1949 as per amending Act of 1965.
  • RBI was vested with extensive powers for the supervision of banking in India as a Central Banking Authority.
  • In 1955, Imperial Bank of India was nationalized and given the name “State Bank of India” (SBI), to act as a principal agent of RBI and it was established under State Bank of India Act, 1955.

Seven subsidiaries of SBI was nationalized in 1959.


  • State Bank of Patiala
  • State Bank of Hyderabad
  • State Bank of Travancore
  • State Bank of Bikaner and Jaipur
  • State Bank of Mysore
  • State Bank of Saurashtra
  • State Bank of Indore

State Bank of Saurashtra in 2008 and State Bank of Indore in 2010, merged with SBI.

On 19th July, 1969, 14 major Indian commercial banks of the country were nationalized.


  • Central Bank of India
  • Bank of Maharashtra
  • Dena Bank
  • Punjab National Bank
  • Syndicate Bank
  • Canara Bank
  • Indian Bank
  • Indian Overseas Bank
  • Bank of Baroda
  • Union Bank
  • Allahabad Bank
  • United Bank of India
  • United Commercial Bank
  • Bank of India

In 1980, another six banks were nationalized with deposits over 200 crore and thus raising the number to 20.


  • Andhra Bank
  • Corporation Bank
  • New Bank of India (In 1993 merged with Punjab National Bank)
  • Oriental Bank of Commerce
  • Punjab and Sind Bank
  • Vijaya Bank
  • On the suggestions of Narasimhan Committee, the Banking Regulation Act was amended in 1993 and thus the gates for new private banks were opened.
  • In 1971 Credit Guarantee Corporation was formed
  • In 1975 Regional Rural Banks (RRBs) were formed.
  • By the end of 1974, three separate institutional arrangements Commercial Banks, Cooperative Banks, RRBs were emerged.
  • Establishment of National Bank for Agriculture and Rural Development (NABARD) in 1982 for cooperative credit.
  • Apart from NABARD,
S. no
1 EXIM(Export-Import Bank of India) Agricultural Sector
2 SIDBI(Small Industries Development Bank of India) Credit needs of small industries
3 NHB(National Housing Board) Housing Board
  • In 1988 Securities and Exchange Board of India was established to cater the security market in India.
  • Since 1991, the Indian financial system has undergone radical transformation leads to the development of Non Banking Financial Companies (NBFCs) and Development Financial Institutions (DIFs).
  • Competition has been infused into the financial system by licensing new private banks since 1993.
  • The minimum capital of new Private Sector Banks should be Rs.300 crore.

These banks are


  • Axis Bank Ltd
  • Development Credit Bank Ltd
  • HDFC Bank Ltd
  • ICICI Bank Ltd
  • Industrial Bank Ltd
  • Kotak Mahindra Bank Ltd
  • Yes Bank Ltd

In India the number of Foreign Banks is increasing in Private Sector and these banks will do all the commercial banking business.


  • HSBS Ltd
  • Deutsche Bank
  • BNP Paribas
  • State Bank of Mauritius
  • Doha Bank
  • Standard Charted Bank
  • Bank of America
  • AB Bank Ltd
  • The Royal Bank of Scotland
  • Industrial Bank of Korea
  • Banks have come a long way from the temples of the ancient world, but their basic business practices have not changed.
  • Even if the future takes banks completely off your street corner and onto the internet, or has you shopping for loans across the globe, the banks will still exist to perform this primary function.

Happy Reading!!


  • The below information is wrong :

    The Reserve Bank of India (RBI) was established on 1st April 1935, under the Banking Regulation Act 1934.

    RBI was formed under the RBI Act ,1934.

  • Thanks for sharing this information.have shared this link with others keep posting such information..

  • Bank of Hindustan is the first bank in India.It is established on 1770. but we right establishment day 1790 in table once check it.

  • I don’t have more knowledge all about the bank of India. About this knowledgeable site welcome up till the bank people.