Banking History - Pre-Independence Banking history of India

Banking history of India is divided into Two major categories -

• Pre-Independence Banking History
• Post-Independence Banking History

Pre-Independence Banking :-

• The origin of modern Banking in India dates back to the 18th century.
• Bank of Hindusthan was established in 1770 and it was the first bank at Calcutta under European management.
• Banking Concept in India was brought by Europeans.
• In 1786 General Bank of India was set up.
• On June 2, 1806 the Bank of Calcutta established in Calcutta. It was the first Presidency Bank during the British Raj.
• Bank of Calcutta was established mainly to fund General Wellesley’s wars against Tipu Sultan and the Marathas.
• On January 2, 1809 the Bank of Calcutta renamed as the Bank of Bengal.
• In 1839, there was a fruitless effort by Indian merchants to establish a Bank called Union Bank but it failed within a decade.
• On 15th April, 1840 the second presidency Bank was established in Bombay – Bank of Bombay.
• On 1 July 1843 the Bank of Madras was established in Madras, now Chennai. It was the third Presidency Bank during the British Raj.
• Allahabad Bank which was established in 1865 and working even today.
• The oldest Public Sector Bank in India having branches all over India and serving the customers for the last 145 years is Allahabad Bank. Allahabad bank is also known as one of India’s Oldest Joint Stock Bank.
• These Presidency banks worked as quasi central banks in India for many years under British Rule.
• The Comptoire d’Escompte de Paris opened a branch in Calcutta in 1860.
• HSBC established itself in Bengal in 1869
• Calcutta was the most active trading port in India, mainly due to the trade of the British Empire, and so became a banking center.
• The Oldest Joint Stock bank of India was Bank of Upper India established in 1863 but this bank was become defunct in 1913.
• In 1881, Oudh Commercial Bank was established at Faizabad it was the first Bank of India with Limited Liability to be managed by Indian Board. After Independence, In 1958 this bank failed.
• In 1895 Punjab National Bank was established in Lahore in Punjab province of Undivided India. It was the first bank purely managed by Indian. PNB has not only survive but also become the second largest public sector bank in India.
• The first Indian commercial bank which was wholly owned and managed by Indians was Central Bank of India which was established in 1911.
• Central bank of India was also called India’s First Truly Swadeshi bank.
• The Swadeshi movement inspired local businessmen and political figures to found banks of and for the Indian community. The period between 1906 and 1911 thousands of Banks were established in India. Many of those banks established then have survived to the present such as Bank of India, Corporation Bank, Indian Bank, Bank of Baroda, Canara Bank and Central Bank of India.
• At least 94 banks in India failed between 1913 and 1918 due to economic crisis during World War I.
• In 27th January, 1921 Bank of Calcutta, Bank of Madras and Bank of Bombay were amalgamated to form Imperial Bank of India.
• In 1926 Hilton-Young Commission submitted it’s report.
• In 1934 Reserve Bank of India act was passed.
• On the recommendation of Hilton-Young Commission, On 1st April 1935 Reserve Bank of India was established.
• RBI was established with initial share capital worth Rs. 5 crore with 5 Lakh Rs. 100 share dividend.