“Banking in India dates back to the mid-18th century. The Bank of Hindustan was established in 1770. It was among the first banks. Let us learn more about Banking history in India.”
History of Banking in India: The banking sector plays an important role in the development of our nation. It contributes to the well-being of a country in many ways. Throughout the years, banking in India has undergone many changes and has grown significantly.
Hurry! avail great discount on PW Skills BFSI course by using the discount coupon STUDYBLISS. Avail huge discounts on various courses on PW Skills.
Evolution of Banking in India
Banking is a major part of the economic development of a country. In India, a job in the banking sector is considered reputable and an achievement. Banking plays a crucial role in a country’s economy and also provides many opportunities for different sectors of society. The banking system in India has developed over the years. Let’s know about the history of the banking system in India.
In India, the banking system developed in three major phases. Let’s know about the phases in detail.
Phase I: It is also known as the pre-independence period. This was the phase between 1770 and 1947.
Phase II: It is known as the post-independence period. This was the phase after we gained independence from 1947 to 1991.
Phase III: In this phase, there were many reforms in the banking sector from 1991 and are still going on.
Also read: Top 10 Banking And Finance Companies (BFSI Companies)
Pre-Independence Period (1786-1947)
- Bank of Hindustan, the first bank in India, was established during this period in 1770. The bank, however, failed in 1832.
- There were more than 600 banks that were registered before the independence period.
- The East India Company also established some banks in India. They established three major banks: Bank of Bombay, Bank of Madras, and Bank of Bengal. The three banks were later known as Imperial Bank of India after the merger.
- The Imperial Bank of India was nationalised in 1955 after independence. It was named as the State Bank of India. It is still the largest public sector bank in India.
Post-Independence Period (1947-1991)
- During the post-independence period, Indian banks saw a lot of changes.
- Many banks in India were handled by private individuals, creating a problem for the government to handle and regulate the banks.
- The government nationalised many banks under the Bank Regulation Act 1949.
- The Reserve Bank of India was nationalised in 1949.
- The Imperial Bank was nationalised in 1955.
- There were a total of 20 banks with a lot of wealth that were nationalised in this phase.
- Seven subsidiaries of the SBI banks were also nationalised in 1959. These banks were merged with the State Bank of India. 2017. The State Bank of Saurashtra and Indore merged in 2008 and 2010.
- The government established the Regional Rural Banks in 1975 for rural sector people as they were primarily dependent on money lenders to get loans and other banking services. They were exploited.
Also read: BFSI Certification – Can It Give Your Private Banking Career a Jump Start?
| Evolution of Banking in India (1947-1991) |
|
Effect Of Independence on the Banking Sector
Banking after Independence saw a lot of changes, with the government nationalising most of the banks. Check some of the important effects of nationalisation in India.
- The bank’s economic conditions started to improve as the government started focusing on developing the banking sector after independence.
- The efficiency of banks increased.
- Development of the rural sector in India.
- The banks started giving people little interest to help the weaker section of society.
- Many banks were nationalised, which also provided them with government support.
- After the 1990s, many new private banks, such as ICICI Bank, HDFC and Axis Bank, were established during these days.
Also read: BFSI Full Form
Evolution of Private Banks in India
The first bank established in the pre-independence period was a private Bank. Many of these banks were nationalised to help the government provide equal opportunities to every society. Many new private banks were formed after the 2000s, such as Kotak Mahindra, Yes Bank, IndusInd Bank, etc. Due to the digital transformation worldwide private banks enhanced their customer experience. They are now using advanced technologies to provide the best banking experience. Nowadays, we can easily transfer and receive money with just one click using online banking, UPI, and much more. These factors are the primary reasons for the continuous growth of the banking sector in India. Today, there are many private banks in India.
| History of Private Banking in India | ||
| Bank Name | Headquarters | Established in the year |
| Axis Bank | Mumbai, Maharashtra | 1993 |
| Bandhan Bank | Kolkata, West Bengal | 2015 |
| CSB Bank | Thrissur, Kerala | 1920 |
| City Union Bank | Thanjavur, Tamil Nadu | 1904 |
| DCB Bank | Mumbai, Maharashtra | 1930 |
| Dhanlaxmi Bank | Thrissur, Kerala | 1927 |
| Federal Bank | Aluva, Kerala | 1931 |
| HDFC Bank | Mumbai, Maharashtra | 1994 |
| ICICI Bank | Mumbai, Maharashtra | 1994 |
| IndusInd Bank | Mumbai, Maharashtra | 1964 |
| IDFC FIRST Bank | Mumbai, Maharashtra | 2015 |
| Jammu & Kashmir Bank | Srinagar, Jammu and Kashmir | 1938 |
| Karnataka Bank | Mangaluru, Karnataka | 1924 |
| Karur Vysya Bank | Karur, Tamil Nadu | 1916 |
| Kotak Mahindra Bank | Mumbai, Maharashtra | 2003 |
| IDBI Bank | Mumbai, Maharashtra | 1964 |
| Nainital bank | Nainital, Uttarakhand | 1922 |
| RBL Bank | Mumbai, Maharashtra | 1943 |
| South Indian Bank | Thrissur, Kerala | 1929 |
| Tamilnad Mercantile Bank | Thoothukudi, Tamil Nadu | 1921 |
| YES Bank | Mumbai, Maharashtra | 2004 |
Role of Banking in BFSI Sectors
Banking plays a major role in the BFSI sector. It is one of the most important parts of the BFSI Industry. Banking is the backbone of a country’s economy. In banking, there are many new opportunities for various job roles. Job in the banking sector pays you well, offers paid leaves, vacations, allowances, and many more. Even entry-level jobs get competitive salaries.
There are many opportunities for freshers or recent graduates in many entry-level jobs with flexible experience and qualifications required. Candidates can learn more about the BFSI sector through our PW BFSI PG Certification Course on PW Skills.
Also read: High Paying BFSI Jobs and How PW Skills Can Help You
FAQs
Which is the largest bank in India?
The State Bank of India is the largest bank in India. It was renamed to be known as the SBI, earlier, it was known as Imperial Bank.
What was Imperial Bank?
Imperial Bank was named after the merging of three British banks named Bank of Bombay, Bank of Madras, and Bank of Bengal.
How many private banks are there in India?
There are a total of 21 private banks in India.
When was the first bank established in India?
The first bank in India was established in 1770, and was known as the Bank of Hindustan.
