By the 1900s, the market expanded with the establishment of banks suchas Punjab National Bank, in 1895 in Lahore and Bank of India, in 1906,in Mumbai - both of which were founded under private ownership. TheReserve Bank of India formally took on the responsibility of regulatingthe Indian banking sector from 1935. After India's independence in 1947,the Reserve Bank was nationalized and given broader powers.
Indian merchants in Calcutta established the Union Bank in 1839, but itfailed in 1848 as a consequence of the economic crisis of 1848-49. TheAllahabad Bank, established in 1865 and still functioning today, is theoldest Joint Stock bank in India.(Joint Stock Bank: A company that issuesstock and requires shareholders to be held liable for the company's debt)It was not the first though. That honor belongs to the Bank of Upper India, which was established in 1863, and which survived until 1913,when it failed, with some of its assets and liabilities being transferred tothe Alliance Bank of Simla.When the American Civil War stopped thesupply of cotton to Lancashire from the Confederate States, promotersopened banks to finance trading in Indian cotton. With large exposure tospeculative ventures, most of the banks opened in India during that periodfailed. The depositors lost money and lost interest in keeping depositswith banks. Subsequently, banking in India remained the exclusivedomain of Europeans for next several decades until the beginning of the20th century.