Banking is today an integral part of our everyday life.

It is
increasing day by day. The world as we know it would not run
smoothly without credit and banks to issue it. Now banking is
known as the backbone of any economy. It plays a vital role in
economic and financial development. The banking history is
exciting and reflects the way we evolved. We have been most
vigorous faith in religion and god. The place of worship was
considered a safe place for money and valuables . It is the
primary reason that they were ransacked during wars. As
money was introduced in gold or silver coins, temple
treasuries started taking deposits and lending activity to
those who needed it.

Pre-Independence Phase

Banking in India originated in the 18th century with the

expansion of trade and commerce. The handling
transcended from individual to groups to companies. The
oldest bank in India is the Bank of Bombay, founded in
1720, followed by the Bank of Hindustan, founded in
1770. The oldest bank in India is the State Bank of India,
which originated in the Bank of Calcutta in June 1806,
which almost immediately became the Bank of Bengal.
Later Indian merchants established the Union Bank in
1839 in Calcutta, but it failed in 1848 due to the economic
crisis of 1848-49. The Allahabad Bank, instituted in 1865
and still functioning today, is India's oldest Joint Stock
bank. The Bank of Bombay, The Bank of Bengal, and the
Bank of Madras merged and formed a single entity called
The Imperial Bank in 1921. In April of 1935, the Hilton
Young Commission developed The Reserve Bank of
India (RBI). These events formed the roots of the banking
sector.

Post-Independence Phase

Post-independence was the second phase of banking

evolution. The Government of India initiated measures to
play an active role in the nation's economic life, and the
Industrial Policy Resolution adopted by the government
in 1948 envisaged a mixed economy. It resulted in greater
state involvement in different segments of the economy,
including banking and finance.
The First Instance of the Nationalization of Banks was in
1949, wherein the Reserve Bank of India (RBI) was
nationalized.
The Second Instance and perhaps the more crucial one
was the Nationalization of 14 Commercial Banks in 1969
and 6 more in 1980.
The Third Instance was with Regional Rural Banks
(RRB) in 1975 under the Narasimham Committee. These
Banks were started to serve the Rural Populace and
promote Financial Inclusion.
The Fourth Instance was an essential one that guides
Economic Growth to this day. It involved the setting up of
various Apex Banks for a few specific sectors. In 1982,
The National Bank for Agriculture and Rural
Development (NABARD) was set up, the Export-Import
Bank (EXIM) in 1982, the National Housing Bank (NHB)
in 1988, and the Small Industries Development Bank of
India (SIDBI) in 1990.
The Impact of the Nationalization Policies made a
difference. There was improved efficiency in the Banking
System owing to the boost in Public Confidence, and
sectors relating to Agriculture, Small and Medium
Industries received more funds. It led to Economic
Growth and Rural Branching.

Economic Liberalization

The third phase was Economic Liberalization in India.

After Independence in 1947, India adhered to socialist
policies. The extensive regulation was sarcastically
dubbed as the "License Raj". The Government of India,
headed by Narasimha Rao, decided to usher in several
reforms that are collectively termed as liberalization in the
Indian media with Manmohan Singh, whom he appointed
Finance Minister. Dr Manmohan Singh, an acclaimed
economist, played a central role in implementing these
reforms.
In the early 1990s, the then Narasimha Rao government
began a liberalization policy, licensing a small number of
private banks. These came to be known as New
Generation tech-savvy banks and included Global Trust
Bank (the first of such new generation banks to be set up),
which later amalgamated with Oriental Bank of
Commerce, Axis Bank(earlier as UTI Bank), ICICI Bank,
and HDFC Bank. This move, along with the rapid growth
in the economy of India, revitalized the banking sector in
India, which has seen rapid growth with solid
contributions from all three sectors of banks, namely,
government banks, private banks, and foreign banks.
In 2007, banking in India is generally relatively mature in
terms of supply, product range, and reach-even though
reach in rural India remains a challenge for the private
sector and foreign banks. The RBI introduced new set of
banks- Payments Bank and Small Bank in 2013-14, with
an aim to make sure that every Indian get access to
finance. It helped in rapid digitization in banks.

There has been a big revolution in the banking sector over

the years and it is bound to evolve further. With various
steps and new features that the banking industry is
introducing, this sector will grow further.