

{"id":84422,"date":"2020-10-17T14:21:14","date_gmt":"2020-10-17T08:51:14","guid":{"rendered":"https:\/\/data-flair.training\/blogs\/?p=84422"},"modified":"2021-03-23T16:22:13","modified_gmt":"2021-03-23T10:52:13","slug":"indian-banking-history","status":"publish","type":"post","link":"https:\/\/data-flair.training\/blogs\/indian-banking-history\/","title":{"rendered":"History of Banking In India &#8211; Evolution of Banking System in India"},"content":{"rendered":"<p><span style=\"font-weight: 400\">Banking is considered to be the \u201cBackbone of a Nation\u2019s Economy\u201d. The Indian Banking, today, is divided into commercial banks which are Private, Public scheduled and non-scheduled banks, Regional and Rural, and Cooperative Banks.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Banking Companies Act of 1949 defined banking as accepting for the purpose of lending or investment of depositing money from the public, repayable on demand or otherwise and withdrawable by cheque draft or otherwise. Let us learn more about the History of Banking System in India.<\/span><\/p>\n<p><a href=\"https:\/\/data-flair.training\/blogs\/wp-content\/uploads\/sites\/2\/2020\/10\/History-of-Banking-in-India.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-84423\" src=\"https:\/\/data-flair.training\/blogs\/wp-content\/uploads\/sites\/2\/2020\/10\/History-of-Banking-in-India.jpg\" alt=\"History of Banking in India\" width=\"1200\" height=\"628\" srcset=\"https:\/\/data-flair.training\/blogs\/wp-content\/uploads\/sites\/2\/2020\/10\/History-of-Banking-in-India.jpg 1200w, https:\/\/data-flair.training\/blogs\/wp-content\/uploads\/sites\/2\/2020\/10\/History-of-Banking-in-India-300x157.jpg 300w, https:\/\/data-flair.training\/blogs\/wp-content\/uploads\/sites\/2\/2020\/10\/History-of-Banking-in-India-1024x536.jpg 1024w, https:\/\/data-flair.training\/blogs\/wp-content\/uploads\/sites\/2\/2020\/10\/History-of-Banking-in-India-150x79.jpg 150w, https:\/\/data-flair.training\/blogs\/wp-content\/uploads\/sites\/2\/2020\/10\/History-of-Banking-in-India-768x402.jpg 768w, https:\/\/data-flair.training\/blogs\/wp-content\/uploads\/sites\/2\/2020\/10\/History-of-Banking-in-India-720x377.jpg 720w, https:\/\/data-flair.training\/blogs\/wp-content\/uploads\/sites\/2\/2020\/10\/History-of-Banking-in-India-520x272.jpg 520w, https:\/\/data-flair.training\/blogs\/wp-content\/uploads\/sites\/2\/2020\/10\/History-of-Banking-in-India-320x167.jpg 320w\" sizes=\"auto, (max-width: 1200px) 100vw, 1200px\" \/><\/a><\/p>\n<h2>History of Banking System in India<\/h2>\n<p><span style=\"font-weight: 400\">The Banking sector in India has seen a lot of transitions and changes over the centuries. It can be broadly categorized into 3 sub-parts that are:<\/span><\/p>\n<ol>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Pre-Independence (Before 1947)<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">II Phase (1947 to 1991)<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">III Phase (1991 and beyond).\u00a0<\/span><\/li>\n<\/ol>\n<h3>Banking during Pre-Independence (1770 to 1947)<\/h3>\n<p><span style=\"font-weight: 400\">There were quite a few banks established during this time. The Banking System in India began with the establishment of the Bank of Hindustan in 1770 but it stopped operating by 1832.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400\">During this period, over 600 banks were established. However, very few were able to succeed. Some of the banks were &#8211;\u00a0<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">The General Bank of India (1786-1791)<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Bank of Bengal (1809)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Bank of Bombay (1840)<\/span><\/li>\n<li><span style=\"font-weight: 400\">Oudh Commercial Bank (1881-1958)<\/span><span style=\"font-weight: 400\">\u00a0\u00a0\u00a0\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Bank of Madras (1843)\u00a0\u00a0\u00a0<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400\">This phase also witnessed the alliance of the 3 major banks &#8211; Bank of Bengal, Bank of Madras, and Bank of Bombay established by The East India Company.\u00a0 They together amalgamated and formed the Imperial Bank. This was taken over by the SBI (State Bank of India) in 1955.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400\">Other Banks that were established during this time were &#8211;\u00a0 Allahabad Bank (est. 1865), Punjab National Bank (est. 1894), Bank of India (est. 1906), Bank of Baroda (est. 1908), and Central Bank of India (est. 1911).\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400\">The reasons why many major banks failed to survive during the pre-independence period, the following conclusions can be drawn:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Indian account holders had become fraud-prone.<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Lack of machines and technology.<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Human errors &amp; time-consuming.<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Fewer facilities.<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Lack of proper management skills.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400\">Following the Pre-Independence period was the post-independence period which observed some major changes in the banking industry scenario and has to date developed a lot.\u00a0<\/span><\/p>\n<h3>II Phase of Indian Banking &#8211; Banking Post Independence (1947 to 1991)<\/h3>\n<p><span style=\"font-weight: 400\">The then Government &#8211; after Indian Independence, decided to nationalize the Banks because all the major banks were led privately which was a cause of concern as people in the rural areas still turned to money lenders for assistance.<\/span><\/p>\n<p><span style=\"font-weight: 400\">Under the Banking Regulation Act, 1949, these banks were nationalized and the Reserve Bank of India was nationalized in 1949. These banks are:<\/span><\/p>\n<ol>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Allahabad Bank\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Bank of India\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Bank of Baroda<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Central Bank of India<\/span><\/li>\n<li><span style=\"font-weight: 400\">Bank of Maharashtra\u00a0\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Canara Bank\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Dena Bank<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Indian Overseas Bank<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Indian Bank<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Punjab National Bank\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Syndicate Bank\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Union Bank of India<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">United Bank\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">UCO Bank<\/span><\/li>\n<\/ol>\n<p><span style=\"font-weight: 400\">In\u00a0 1980, 6 other banks were nationalized that are:\u00a0<\/span><\/p>\n<ol>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Andhra Bank<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Corporation Bank<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">New Bank of India<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Oriental Bank of Comm.<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Punjab &amp; Sind Bank<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Vijaya Bank\u00a0<\/span><\/li>\n<\/ol>\n<p><span style=\"font-weight: 400\">Seven subsidiaries of SBI which were nationalized in 1959:<\/span><\/p>\n<ol>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">State Bank of Patiala\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">State Bank of Hyderabad\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">State Bank of Bikaner &amp; Jaipur\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">State Bank of Mysore\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">State Bank of Travancore\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">State Bank of Saurashtra\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">State Bank of Indore<\/span><\/li>\n<\/ol>\n<p><span style=\"font-weight: 400\">All these banks were later merged with the State Bank of India in 2017, except for the State Bank of Saurashtra, which was merged in 2008.\u00a0 State Bank of Indore was merged in 2010.<\/span><\/p>\n<h3>Impact of Nationalisation on Banking System<\/h3>\n<p><span style=\"font-weight: 400\">There were several reasons for nationalism in the banks of India that are:<\/span><\/p>\n<ol>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Nationalism led to an increase in funds and thereby increased the economic condition of the country.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">It increased efficiency.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">It helped in boosting the rural and agricultural sector of the country.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">This opened up a major employment opportunity for the people.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">The profit gained by Banks was used by the Government for the betterment of the people.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">The competition was decreased and work efficiency had increased.\u00a0<\/span><\/li>\n<\/ol>\n<p><span style=\"font-weight: 400\">The post-independence phase was the one that led to the major development of the banking sector in India.\u00a0<\/span><\/p>\n<h3>III Phase of Indian Banking(1991 to beyond)<\/h3>\n<p><span style=\"font-weight: 400\">To provide stability and profitability to the Nationalised Public sector Banks, the Government decided to set up a committee under the leadership of Shri. M Narasimham to manage the various reforms in the Indian banking industry.<\/span><\/p>\n<p><span style=\"font-weight: 400\">The biggest development was the introduction of Private sector banks in India. RBI gave license to 10 Private sector banks to establish themselves in the country. These banks included:<\/span><\/p>\n<ol>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Global Trust Bank<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">ICICI Bank<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">HDFC Bank<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Axis Bank<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Bank of Punjab<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">IndusInd Bank<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Centurion Bank<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">IDBI Bank<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Times Bank<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Development Credit Bank<\/span><\/li>\n<\/ol>\n<p><span style=\"font-weight: 400\">A majority of Indian citizens shifted to online or net banking.\u00a0<\/span><\/p>\n<p><b>List of Public Sector Banks and Private Sector Banks in India are:<\/b><\/p>\n<ol>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Axis Bank<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Bank of Baroda\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Bank of India\u00a0<\/span><\/li>\n<li><span style=\"font-weight: 400\">Bandhan Bank\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Bank of Maharashtra\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Canara Bank\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Central Bank of India\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">City Union Bank\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Dhanlaxmi Bank\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Federal Bank\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">HDFC Bank\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">IDBI Bank\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Indian Bank\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Indian Overseas Bank\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">ICICI Bank\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">IDFC Bank\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Indusind Bank\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Karnataka Bank\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Karur Vysya Bank<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Kotak Mahindra Bank\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Lakshmi Vilas Bank\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Punjab National Bank\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Punjab &amp; Sind Bank\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">RBL Bank\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">State Bank of India\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">South Indian Bank\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">UCO Bank\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Union Bank of India\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Yes Bank\u00a0<\/span><\/li>\n<\/ol>\n<p><b>List of Small Finance Banks in India:<\/b><\/p>\n<ol>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Capital Small Finance Bank\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Equitas Small Finance Bank\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Utkarsh Small Finance Bank\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Suryoday Small Finance Bank\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Ujjivan Small Finance Bank\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">ESAF Small Finance Bank\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Au Small Finance Bank\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Fincare Small Finance Bank\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">North East Small Finance Bank\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Jana Small Finance Bank\u00a0<\/span><\/li>\n<\/ol>\n<p><b>List of payment banks in India:<\/b><\/p>\n<ol>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Airtel Payment Bank Ltd.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Paytm Payments Bank\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Fino Payments Bank\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Jio Payments Bank\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">Aditya Birla Idea Payments Bank\u00a0<\/span><\/li>\n<li style=\"font-weight: 400\"><span style=\"font-weight: 400\">India Post Payment Bank\u00a0<\/span><\/li>\n<\/ol>\n<h3>Conclusion<\/h3>\n<p><span style=\"font-weight: 400\">The banks have revolutionized over the years. The Banking sector is extremely important for a country\u2019s economy. In order to keep the system to thrive, estimated interval changes and modifications are to be made.\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Banking is considered to be the \u201cBackbone of a Nation\u2019s Economy\u201d. The Indian Banking, today, is divided into commercial banks which are Private, Public scheduled and non-scheduled banks, Regional and Rural, and Cooperative Banks.&#46;&#46;&#46;<\/p>\n","protected":false},"author":6,"featured_media":84423,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22591],"tags":[23309,23527,23528],"class_list":["post-84422","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general-awareness-tutorials","tag-banking-system-in-india","tag-history-of-banking-in-india","tag-indian-banking-system"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.8 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>History of Banking In India - Evolution of Banking System in India - DataFlair<\/title>\n<meta name=\"description\" content=\"Banking system commenced in India with foundation of Bank of Hindustan in 1770 which operated will 1832. 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