HISTORY AND DEVELOPMENT OF BANKS IN INDIA

Bulomine Regi.SAsst. Prof. of Business Administration,St. Xavier’s College (Autonomous),Palayamkottai-627002Email id: drregi23@gmail.com

HISTORY

AND

DEVELOPMENT

OF

BANKS IN IN

DIA

STAGES IN HISTORY OF BANKING IN INDIA

History of Banking has been divided intoStages like:• Pre-independence stage• Post Independence stage• Nationalisation of Banks• Introduction of Financial Sector Reforms• IT revolution in Banks

History of Banking in IndiaPhase- I ( Early Phases from1786-1969 of

Indian Banks)Phase- II (1949 Nationalisation of

IndianBanks and upto 1991 prior to Indian Banking Sector Reforms)

Phase-III (New Phase of Indian Banking System with the advent of Indian Financial and Banking Sector Reforms after 1991)

PHASE- I

(EARLY PHASES FROM 1786-1969 OF INDIAN BANKS)

In the mid of 19 century East India Company

IMPERIAL BANK OF INDIA(1920)

Bank of Bengal(1809)

Presidency Banks

Later in

1865 Allahabad Bank1894 Punjab National Bank

1906-1913 Bank of India, Central Bank of

India, Bank of Baroda, Canara

Bank, Indian Bank, Bank of Mysore

1935 RESERVE BANK OF INDIA

During First Phase• The growth of banks was very slow.• Banks experienced periodic failures

between 1913-1948.• 1100 Banks (Approx.) mostly small.• To streamline that the Government of

India came up with THE BANKING COMPANIES ACT,1949.

THE BANKING COMPANIES ACT, 1949

BANKING REGULATION ACT,1949(as per amending Act of 1965- Act

No. 23 of 1965)

RBI was vested with extensive powers for the supervision of banking in India as the Central Banking Authority.

PHASE- II

(1949 Nationalisation of IndianBanks and upto 1991 prior

to Indian Banking Sector Reforms)

After Independence,

Imperial BankState Bank India Act,

1955

State Bank of India

1949 ---- Banking Regulation Act1955 ---- Nationalisation of SBI1959 ---- Nationalisation of SBI subsidiaries

(7 Banks)1961---- Insurance cover extended to

deposits1969 ---- Nationalisation of 14 major Banks1971---- Credit Guarantee Corporation1975 ---- Regional Rural Banks1980 ---- Six Banks with deposits over 200

crores were nationalised

PHASE- III

(New Phase of Indian Banking System with the advent of Indian

Financial and Banking Sector Reforms after 1991)

In 1991 Government opened the gate of

Liberalisation of banking practices as per the report of a banking committee set up under the chairmanship of Mr.M.Narasimham

(Narasimham Committee for the development and growth of the Indian

Banking System)

In 1993

• The Government merged New Bank of India with Punjab National Bank.

• It was the only merger between nationalised banks and resulted in the reduction of the number of nationalised banks from 20 (14+6= 20) to 19.

Till nowBanking industry has changed

tremendously with retail banking shifting to universal banking.

The country is flooded with foreign banks.ATM, Phone Banking, Internet Banking

etc., was introduced.The entire banking system became more

convenient and swift.The financial system of India shown a

great deal during this phase.