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Banking has been a significant part of our lives for a very long time and this sector contribute a major part
in our economy. The history of Banking in India has seen a lot of phases, reforms & has been
continuously evolving since then.So, In this article, we give you a detailed History of Banking in
India prepared from the point of view of exams.
Pre-Independence Stage
• More than 600 banks were present at that phase.
• The first bank of India was established in 1770 thus marking the Banking system in India with the
foundation of the Bank of Hindustan.
• Top three banks were merge during this phase - Bank of Bengal, Bank of Bombay & Bank of Madras and
came into being as Imperial Bank, which was later taken over by SBI in 1955
• Some other banks were also established during this period like Allahabad Bank 1865, Punjab National
Bank 1894, Bank of India 1906, Bank of Baroda 1908, Central Bank of India 1911
Currently, Banks in India can be categorized into Scheduled and Non-scheduled Banks-
1) Scheduled Banks
Scheduled Banks in India are those banks which constitute those banks, which have been included in the
Second Schedule of Reserve Bank of India (RBI) Act, 1934.
It basically comprises Commercial Banks and Cooperative Banks. Commercial Banks majorly comprises of
scheduled and Non-scheduled commercial banks regulated Banking Regulations Act 1949.
Commercial Banks primarily works on a ‘Profit Basis’ and is engaged in the business of accepting deposits
for the purpose of advances/loans. We can categorize scheduled commercial banks into four types:
• Public Sector Banks
• Private sector Banks
• Foreign Banks
• Regional Rural Banks
2) Non-scheduled bank
Non- Scheduled Banks defined in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949),
which is not a scheduled bank".
Reserve Bank of India is the only central bank of India and all Banks in India are required to follow the
guidelines as issued by RBI. We can also classify Banks in India as:
• Public Sector Banks: These are those entities which are owned by Govt. having more than 51% stake
in the capital.
• Private Sector Banks: Private Banks are those entities which are owned by private
individuals/institutions and these are registered under the Companies Act 1956 as Limited Companies.
• Regional Rural Banks (RRBs): These entities are completely under government and work for the
betterment of the rural sector of the society.
• Development Banks: These basically include Industrial Finance Corporation of India (IFCI) which was
established in 1948, Export-Import Bank of India (EXIM Bank) which was established in 1982, National
Bank for Agriculture & Rural Development (NABARD) which was established in 1982, and Small
Industries Development Bank of India (SIDBI) which was established on 2nd April 1990