Banking in India - A Historical Overview

 Banking in India - A Historical Overview

Banking in India - A Historical Overview

1. History of Banking in India- Introduction
2. Banking in India - Stages of Development
3. Pre-Independence Stage - Pre-Independence Status
4. History of Banking (1947 to 1991)
5. History of Banking – After 1991
6. The current position of the banks
7. First of all, in the Indian banking system

 1. History of Banking in India - Introduction 

In regard to the Banking Companies Act of 1949, banking is a financial institution that accepts deposits from the public with loans or investments, repay on demand, cheque drafts, orders, etc., payable by others.

2. History Overview of Banking in India - Stages of Development

We can classify the history of banking into three steps -

1. Pre-Independence Stage - Before 1947

2. II Phase - 1947 to 1991

3. III Phase - 1991 & beyond

3. Pre-independence status

India's first bank was established in 1770, and thus the banking system started in India with the stone foundation of the Bank of Hindustan.

The top three banks had been merged during this phase - Bank of Bengal, Bank of Bombay, Bank of Madras, and Imperial Bank came into existence, which SBI later took over in 1955.

Some other banks were also in existence during this period, such as Allahabad Bank in 1865, Punjab National Bank in 1894, Bank of India in 1906, Bank of Baroda 1908, Central Bank of India 1911. More than 600 banks were present at this time.

 4. History of Banking (1947 to1991)

The bank was nationalized during this period.

In 1949, the Central Bank of India was also nationalized.

With the recommendation of the Narasimha Committee, the Regional Rural Banks was constituted on October 2, 1975.

 5. History of Banking – After 1991

• In 1991, liberal economic policies were formulated to ensure banks' progress.

• This phase was expansion, consolidation, and increment in many ways.

RBI has also granted licenses to 10 private entities, including ICICI, Axis Bank, HDFC, DCB, Indusland Bank.

6. The current position of the banks

Banks in India are currently quite mature in terms of supply, product range, and reach-even – although access to rural India remains a challenge for the private sector and foreign banks.

 At present, banks in India can be classified into scheduled and non-scheduled banks:

 1) Scheduled Banks (Scheduled Banks)

Scheduled banks in India are the banks that have been included in the Second Schedule to the Reserve Bank of India (RBI) Act, 1934.

 This includes commercial banks and cooperative banks. Commercial banks mainly include scheduled and non-scheduled commercial banks that regulate the Banking Regulation Act 1949.

 Commercial banks mainly operate on a 'profit basis' and are engaged in accepting deposits for advances/loans.

 • Public Sector Banks

• Private sector Banks

• Foreign Banks

• Regional Rural Banks

2) Non-Scheduled Banks (Non-Scheduled Banks)

The non-scheduled banks are defined in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949), which is not a scheduled bank".

 Reserve Bank of India has been established as the only central bank in India, and all banks in India are guided to follow the guidelines issued by RBI. We can also classify banks in India:  

a.  Public Sector Banks (Public Sector Banks):

These are the bodies that the government runs. The RBI controls these; all banks in which the government has more than 50% stake are called public sector banks.

 b. Private Sector Banks (Private Banks):

Private banks are entities that are designed to provide for private persons/entities. The institutions are owned and registered as limited companies under the Companies Act, 1956.

 Regional Rural Banks (RRBs) - Regional Rural Banks (RRBs): 

These institutions work entirely under the government and work to develop the rural area of the society.

 Development Banks: 

These include the Industrial Finance Corporation of India (IFCI), 

which was initially established in 1948, the Export-Import Bank of India (EXIM Bank), which was established in 1982; the National Bank for Agriculture and Rural Development (NABARD), which was established in 1982 and the Small Industries Development Bank of India (SIDBI) which was established in 1982. It was founded on April 2, 1990.

7. First of all, in the Indian banking system:

• The first bank in India was the Bank of Hindustan (1770)
• The first bank managed by Indians was the Avadh Commercial Bank
• The first bank with Indian capital had in Punjab National Bank (the founder of the bank is Lala Lajpat Rai)
• HSBC has the status of the first foreign bank in India.
• Canara Bank is the first bank to get an ISO certificate.
• Bank of India is the first Indian bank outside India.
• The first bank to start an ATM was HSBC (1987, Mumbai).
• The first bank has a joint-stock public bank (oldest) Allahabad Bank.
• The first universal bank is ICICI (Industrial Credit and Investment Corporation of India).
• The first bank to start a savings account is Presidency Bank (1833). 
• The first bank to introduce cheques was The Bank of Bengal (1833)
• ICICI is the first bank to offer an internet banking facility.
• The first bank for selling mutual funds is The State Bank of India
• The first bank for issuing credit cards is the Central Bank of India
• The first digital bank is DigiBank
• First Rural Regional Bank (Grameen Bank) First Bank (Sponsored by Syndicate Bank)
• 'The first bank for getting a banking license in principle is IDFC and Bandhan Bank.
• Is the first bank to start merchant banking in India, Grant Less Bank
• ICICI is the first bank to introduce blockchain technology
• The first bank to introduce voice biometrics is Citibank
• HDFC is the first bank to introduce robots in banking services