Banking Seminar Report Sem 1

Hirachand Nemchand College of Commerce,
Solapur
(Autonomous College)
MBA Section
Seminar Report
Name- Farukh Mehboob Shaikh
Std- MBA-I Sem-I
Div- Innovators
Roll No- 3254
Subject- Banking Operations and Services
Topic- Evolution of Banking in India

Evolution of Banking in India
Banking in India forms the base for the economic development of the country.
Major changes in the banking system and management have been seen over the
years with the advancement in technology, considering the needs of people.
The History of Banking in India dates back to before India got independence in
1947.
The banking sector development can be divided into three phases:

Phase I: The Early Phase which lasted from 1770 to 1969
Phase II: The Nationalisation Phase which lasted from 1969 to 1991
Phase III: The Liberalisation or the Banking Sector Reforms Phase which
began in 1991 and continues to flourish till date
Pre Independence Period (1786-1947)

The first bank of India was the “Bank of Hindustan”, established in 1770 and
located in the then Indian capital, Calcutta. However, this bank failed to work
and ceased operations in 1832.
During the Pre Independence period over 600 banks had been registered in the
country, but only a few managed to survive.
Following the path of Bank of Hindustan, various other banks were established
in India. They were:
 The General Bank of India (1786-1791)
 Oudh Commercial Bank (1881-1958)
 Bank of Bengal (1809)
 Bank of Bombay (1840)
 Bank of Madras (1843)
During the British rule in India, the East India Company had established three
banks: Bank of Bengal, Bank of Bombay and Bank of Madras and called them
the Presidential Banks. These three banks were later merged into one single
bank in 1921, which was called the “Imperial Bank of India.”
The Imperial Bank of India was later nationalised in 1955 and was named The
State Bank of India, which is currently the largest Public sector Bank.
If we talk of the reasons as to why many major banks failed to survive during
the pre-independence period, the following conclusions can be drawn:
 Indian account holders had become fraud-prone
 Lack of machines and technology
 Human errors & time-consuming
 Fewer facilities
 Lack of proper management skills
Following the Pre-Independence period was the post-independence period,
which observed some significant changes in the banking industry scenario and
has till date developed a lot.
Post Independence Period (1947-1991)

At the time when India got independence, all the major banks of the country
were led privately which was a cause of concern as the people belonging to
rural areas were still dependent on money lenders for financial assistance.
With an aim to solve this problem, the then Government decided to nationalise
the Banks. These banks were nationalised under the Banking Regulation Act,
1949. Whereas, the Reserve Bank of India was nationalised in 1949.
Candidates can check the list of Banking sector reforms and Acts at the linked
article.
Following it was the formation of State Bank of India in 1955 and the other 14
banks were nationalised between the time duration of 1969 to 1991. These were
the banks whose national deposits were more than 50 crores.
Given below is the list of these 14 Banks nationalised in 1969:
 Allahabad Bank
 Bank of India
 Bank of Baroda
 Bank of Maharashtra
 Central Bank of India
 Canara Bank
 Dena Bank
 Indian Overseas Bank
 Indian Bank
 Punjab National Bank
 Syndicate Bank
 Union Bank of India
 United Bank
 UCO Bank
In the year 1980, another 6 banks were nationalised, taking the number to 20
banks. These banks included:
 Andhra Bank
 Corporation Bank
 New Bank of India
 Oriental Bank of Comm.
 Punjab & Sind Bank
 Vijaya Bank
Apart from the above mentioned 20 banks, there were seven subsidiaries of SBI
which were nationalised in 1959:
 State Bank of Patiala
 State Bank of Hyderabad
 State Bank of Bikaner & Jaipur
 State Bank of Mysore
 State Bank of Travancore
 State Bank of Saurashtra
 State Bank of Indore
All these banks were later merged with the State Bank of India in 2017, except
for the State Bank of Saurashtra, which merged in 2008 and State Bank of
Indore, which merged in 2010.
Impact of Nationalisation
There were various reasons why the Government chose to nationalise the banks.
Given below is the impact of Nationalising Banks in India:
 This lead to an increase in funds and thereby increasing the economic
condition of the country
 Increased efficiency
 Helped in boosting the rural and agricultural sector of the country
 It opened up a major employment opportunity for the people
 The Government used profit gained by Banks for the betterment of the
people
 The competition decreased, which resulted in increased work efficiency
This post Independence phase was the one that led to major developments in the
banking sector of India and also in the evolution of the banking sector.
Liberalisation Period (1991-Till Date)

Once the banks were established in the country, regular monitoring and
regulations need to be followed to continue the profits provided by the banking
sector. The last phase or the ongoing phase of the banking sector development
plays a hugely significant role.
To provide stability and profitability to the Nationalised Public sector Banks,
the Government decided to set up a committee under the leadership of Shri. M
Narasimham to manage the various reforms in the Indian banking industry.
The biggest development was the introduction of Private sector banks in India.
RBI gave license to 10 Private sector banks to establish themselves in the
country. These banks included:
 Global Trust Bank
 ICICI Bank
 HDFC Bank
 Axis Bank
 Bank of Punjab
 IndusInd Bank
 Centurion Bank
 IDBI Bank
 Times Bank
 Development Credit Bank
The other measures taken include:
 Setting up of branches of the various Foreign Banks in India
 No more nationalisation of Banks could be done
 The committee announced that RBI and Government would treat both
public and private sector banks equally
 Any Foreign Bank could start joint ventures with Indian Banks
 Payments banks were introduced with the development in the field of
banking and technology
 Small Finance Banks were allowed to set their branches across India
 A major part of Indian banking moved online with internet banking and
apps available for fund transfer
Thus, the history of banking in India shows that with time and the needs of
people, major developments have been brought about in the banking sector with
an aim to prosper it.

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Hirachand Nemchand College of Commerce,

Name- Farukh Mehboob Shaikh

Std- MBA-I Sem-I

Roll No- 3254

Subject- Banking Operations and Services

Topic- Evolution of Banking in India

The banking sector development can be divided into three phases:

Pre Independence Period (1786-1947)

Post Independence Period (1947-1991)

Liberalisation Period (1991-Till Date)

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