Banking History &

Types of Banks
 Banking History & Types of Banks
❑ The first bank of India was established in 1770.
❑ Since then the banking system in India has evolved
over time.
❑ The phases of Indian Banking are classified as follows:
The Pre-Independence Phase:
❑ This phase is characterised by the presence of large
number of banks.
❑ Bank of Hindustan in Calcutta was the first bank of
India established in 1770 but it ceased to operate in
1832.
❑ Oudh Commercial Bank established in 1881 was the
first commercial bank of India.
❑ Allahabad Bank was established in 1865.
❑ Punjab National Bank was established in 1894.
❑ Bank of India was established in 1906.
❑ The Imperial Bank of India was established in 1921 and
later renamed as The State Bank of India in 1955.
❑ The Reserve Bank of India was established in 1935
with Osborne Smith as its first governor.
Second Phase from 1947 to 1991:
❖ The Government of India performed the action of
nationalisation of banks in this phase.
❖ The following banks were nationalised by the Indira
Gandhi Government:
➢ Central Bank of India
➢ Bank of India
➢ Punjab National Bank
➢ Bank of Baroda
➢ United Commercial bank
➢ Canara Bank
➢ Dena Bank
➢ United bank
➢ Syndicate bank
➢ Allahabad bank
➢ Indian Bank
➢ United Bank of India
➢ Bank of Maharashtra
➢ Indian Overseas Bank
❖ On the recommendation of the Narsimhan Committee,
Regional Rural banks were formed under RRB act
1976.
❖ The first RRB setup in India was the Prathama Bank
with its Headquarter at Moradabad in Uttar Pradesh.
❖ In Regional Rural Banks, the Government of India,
State governments and sponsor banks held shares in
ratio of 50%, 15% and 35% respectively.
❖ With a view to meet the specific requirements from
the different sectors apex level banking institutions
were also set up like NABARD (1982), EXIM (1982),
NHB (1988), SIDBI (1990).
Third phase from 1991 and beyond:
❑ The Post-Liberalisation period of Indian banking saw
remarkable in the process of development of Banks.
❑ In 1991, the Narasimham committee gave its
recommendations to allow the entry of private sector
players into the banking systems.
❑ Following this, banks like ICICI, HDFC, AXIS Bank, Kotak
Mahindra Banks came into existence.
❑ In 2015, RBI gave approval to 10 applicants to set up
payment banks in India.
Financial Institutions:
❑ A Financial Institution is a company engaged in a
business of dealing with the financial and monetary
transactions.
❑ Examples of financial institutions are banking
institutions which are classified as:
Scheduled Commercial Banks:
❑ These are defined under the second schedule of the
RBI act, 1934.
❑ These are classified in India into five groups according
to their ownership or nature of operation.
Scheduled Cooperative Banks:
❑ These include Scheduled State Co-operative banks and
Scheduled Urban Co-operative Banks.