Banking in India has its origin as
early as the vedic period. It is believed that the transistion from
money lending to banking must have occurred even before Manu, the great
Hindu Jurist, who has devoted a section of his work to deposits and
advances and laid down rules relating to rates of interest. During the
Mogul period, the indegenous bankers played a very important role in
lending money and financing foreign trade and commerce. During the days
of the East India Company, it was the turn of the agency houses to carry
on the banking business. The General Bank of India was the first Joint
Stock Bank to be established in the year 1786. The others which followed
were the Bank of Hindustan and the Bengal Bank. The Bank of Hindustan is
reported to have continued till 1906 while the other two failed in the
meantime. In the first half of the 19th century the East
India Company established three banks; the Bank of Bengal in 1809, the
Bank of Bombay in 1840 and the Bank of Madras in 1843. These three banks
also known as Presidency Banks, were independent units and functioned
well. These three banks were amalgamated in 1920 and a new bank, the
Imperial Bank of India was established on 27th January 1921.
With the passing of the State Bank of India Act in 1955 the undertaking
of the Imperial Bank of India was taken over by the newly constituted
State Bank of India. The Reserve Bank which is the Central Bank was
created in 1935 by passing Reserve Bank of India Act 1934. In the wake
of the Swadeshi Movement, a number of banks with Indian management were
established in the country namely, Punjab National Bank Ltd, Bank of
India Ltd, Canara Bank Ltd, Indian Bank Ltd, the Bank of Baroda Ltd, the
Central Bank of India Ltd. On July 19, 1969, 14 major banks of the
country were nationalised and in 15th April 1980 six more
commercial private sector banks were also taken over by the government.
Today the commercial banking system in India may be distinguished into :
Public Sector Banks
