Brief History of Banking in India-1

The origin of western type commercial Banking in India dates back to the 18th century. The story of banking starts from Bank of Hindustan established in 1770 and it was first bank at Calcutta under European management. It was liquidated in 1830-32.

From Bank of Hindustan in 1770, the evolution of banking in India can be divided into three different periods as follows:

  • Phase I: Early phase of primitive Indian banks to Nationalization of Banks in 1969
  • Phase II: From Nationalization of India banks in 1969 up to advent of liberalization and banking reforms in 1991
  • Phase III: From Indian Financial and Banking Sector Reforms 1991 onward

In 1786 General Bank of India was set up.

Since Calcutta was the most active trading port in India, mainly due to the trade of the British Empire, it became a banking center. Three Presidency banks were set up under charters from the British East India Company- Bank of Calcutta, Bank of Bombay and the Bank of Madras. These worked as quasi central banks in India for many years.

The Bank of Calcutta established in 1806 immediately became Bank of Bengal. In 1921 these 3 banks merged with each other and Imperial Bank of India got birth. Imperial Bank of India was later renamed in 1955 as the State Bank of India. Thus, State bank of India is the oldest Bank of India.

In 1839, there was a fruitless effort by Indian merchants to establish a Bank called Union Bank. It failed within a decade. Next came Allahabad Bank which was established in 1865 and working even today. The oldest Public Sector Bank in India having branches all over India and serving the customers for the last 145 years is Allahabad Bank. Allahabad bank is also known as one of India’s Oldest Joint Stock Bank. However, the Oldest Joint Stock bank of India was Bank of Upper India established in 1863 and failed in 1913.

The first Bank of India with Limited Liability to be managed by Indian Board was Oudh Commercial Bank. It was established in 1881 at Faizabad. This bank failed in 1958. The first bank purely managed by Indians was Punjab National Bank, established in Lahore in 1895. The Punjab national Bank has not only survived till date but also is one of the largest banks in India.

However, the first Indian commercial bank which was wholly owned and managed by Indians was Central Bank of India which was established in 1911. So, Central Bank of India is called India’s First Truly Swadeshi bank.


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    January 11, 2015 at 7:24 pm

    Allahabad Bank is not the oldest public sector bank. It was founded in 1865. State Bank of India which traces has its roots in the Imperial Bank was founded in 1806.

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    • parimehnaaz

      July 26, 2015 at 5:57 pm

      1770

      Reply
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