Earliest evidence of Banking in India is found from the period of Vedic Civilization. During those days, loan deeds called rnapatra or rnalekhya were prevalent. Interest rates as well as usury (Sood Khori in Hindi) was prevalent in Vedic India. The Vedic word Kusidin refers to an usurer (Soodkhor in Hindi) .This term is also found in Manusmriti. Various types of instruments were found in Buddhist, Mauryan and Mughal periods. The Arthashastra of Kautilya mentions presence of bankers during Maurya era. There were instruments in Maurya Era known as “Adesha” which are equivalent to Bill of exchange of current times.
Origin of Modern Banking Industry in India
Who were the indigenous bankers of India?
Since ancient times, businessmen called Shroffs, Seths, Sahukars, Mahajans, Chettis etc. had been carrying on the business of banking. 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.
Which is the first bank of India?
The first bank of India is Bank of Hindustan established in 1770. This bank was established at Calcutta under European management. It was liquidated in 1830-32.
What were the three Presidency Banks? When they were established?
From 1612 onwards, British East India Company had set up various factories or trading posts in India with the permission of the local Mughal emperors. In this process, they had established three presidency towns viz. Madras in 1640, Bombay in 1687 and Bengal Presidency in 1690. East India Company’s headquarters moved from Surat to Bombay (Mumbai) in 1687. 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. The dates of their establishment were as follows:
- 2 June 1806: Bank of Calcutta was established in 1806; it was renamed in 1809 as Bank of Bengal
- 15 April 1840: Bank of Bombay established
- 1 July 1843: Bank of Madras established
These worked as quasi central banks in India for many years. Since Calcutta was the most active trading port in India, mainly due to the trade of the British Empire; it became a banking center.
What happened with Presidency banks later on?
In 1921, the presidency banks viz. Bank of Bengal, Bank of Bombay and Bank of Madras were amalgamated to form Imperial Bank of India. It was a private entity till that time. In 1955, this Imperial Bank of India was nationalized and renamed as State Bank of India. Thus, State bank of India is oldest Bank of India among the banks that exist today.