History Of Banking In India

Banking is a quintessential part of our existence today. It has always been present through evolution in different forms but it only found a structured framework once money started being used in currency form and the barter system started giving way. A well functioning banking system is very important for any economy to forge ahead a path of sustainable growth.

In India in the old ties people did not have safes at homes and hence kept their money through accounts in temples. The temple workers or priests were held in high esteem and considered honest and the temple also provided a secure environment. Various temples across geographical areas have records of even loaning money and hence became financial centres of cities, consequently primary targets during wars.

During the Maurya dynasty rule an adesha was the equivalent of a modern day bill of exchange for money lending. The arthashastra by Kautilya speaks of Panas used to pay court fines. The Sher Shah is considered by many to be responsible for standardising the use of rupee as currency way back in 1542.

However, the first bank of India came to be in 1770 as Bank of Hindustan at Calcutta which got dissolved around 1830s. Some say that General Bank of India (1880) is the first bank and that Bank of Hindustan was established in 1890.Calcutta was the banking centre since it saw most trade activity during the British rule. The British east India Company had set up three banks Bank of Calcutta, Madras and Mumbai.

The Bank of Calcutta established in 1806 merged with these 2 other banks to form the Imperial Bank of India or presently the oldest bank of India, State Bank of India. The Allahabad Bank remains India’s oldest Public Sector Bank established in 1865 and serves customers even today pan India. There were failures as well in the form of the Union Bank of 1839 by merchants of India or even the Bank of Upper India which failed in 1913.

Foreign banks also came to India Comptoire d'Escompte de Paris in Calcutta in 1860 and HSBC in 1869. The Punjab National Bank is another bank established way back in Lahore in 1895 and still functional in India. The  1906 and  1911 swadeshi movement inspired many Indian leaders and business men to establish banks which continue even today such as Bank of India, Canara Bank, Central Bank etc.

Finally, 1969 July saw the nationalisation of the 14 largest commercial banks and another 6 in 1980s. The 1990s saw India going for economic liberalisation and thus came into being the today’s popular banks of HDFC, ICICI Axis and Oriental bank of commerce.

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