Brief History of Banking in India-1 - General Knowledge Today

Brief History of Banking in India-1

From the ancient times in India, an indigenous banking system has prevailed. The businessmen called Shroffs, Seths, Sahukars, Mahajans, Chettis etc. had been carrying on the business of banking since ancient times. These indigenous bankers included very small money lenders to shroffs with huge businesses, who carried on the large and specialized business even greater than the business of banks.

  • The origin of western type commercial Banking in India dates back to the 18th century.

The story of banking starts from Bank of Hindusthan established in 1770 and it was first bank at Calcutta under European management.

  • 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. It is today's State Bank of India.
  • The name was changed after India's Independence in 1955. So 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.

  • 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 Indian 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 this bank is called India's First Truly Swadeshi bank.
Last Updated: November 22, 2013

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