What Is a Bank
As per the regulations of Banking Companies Act of 1949, A bank is a financial institution that is licensed to receive deposits and make loans. Banks provide a wide range of financial services to individuals, businesses, and governments. Their main role is to act as intermediaries between people who save money and those who need to borrow it.
Evolution Of Banking In India
Banking has its prevalence in India since Vedic times. But here ,we can categorize the History of Banking in India into 3 stages
1. Pre-Independence Stage – Before 1947
2. Banking History II Phase – 1947 to 1991
3. Banking History III Phase – 1991 & beyond
Pre-Independence Stage (Before 1947)
The history of banking in India during the Pre-Independence stage has been discussed below highlighting the important points.
• 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
Post Independence Stage (From 1947 to 1991)
The major points of the History Of Banking In India from the period of 1947 to 1991 has been mentioned here.
• Nationalization of the Bank took place during this period.
• Central bank of India was also nationalized during this period on 1st January 1949.
• With the recommendation of Narsimha committee, Regional Rural Banks were formed on 2nd October 1975.
History of Banking in India Beyond 1991
Here, we have mentioned few important points of the history of banking in India beyond 1991.
• Liberalized economic policies were formed to mark the progress of banks in the year 1991.
• This phase was known was the phase of expansion, consolidation, and increment in many ways.
• RBI also gave license to 10 private entities which include – ICICI, Axis Bank, HDFC, DCB, Indusland Bank.
History Of Banking In India Categories
Currently, Banks in India can be categorized into Scheduled and Non-Scheduled Banks
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 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.
Non-Scheduled Banks
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.
History Of Banking in India First In Indian Banking System
History of Banking in India Reforms
When all the banks were successfully established in India, it was acquiring thorough regulations and monitoring to make the banking sector highly profitable. Then the following Government enrolled a resolution to draft a committee under the mentorship of Shri M. Narasimha to control the reforms in the banking sector. The following committee has done tremendous regulations to make the banking sector proliferate every time by delivering precise work to the customers. The major step was the establishment of private sector banks. The RBI has initiated licensing ten private sector banks to process for the audience and we have listed those 10 banks in the table below.