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    What Is A Bank: Banking & Financial Awareness

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    BABLA MONDAL
    1. A bank is a financial institution that accepts deposits and uses those deposits to make loans and other investments. The oldest bank still in existence in India is State Bank of India, which was formed in 1955 from the merger of three presidency banks established in the 18th century. 2. The first phase of Indian banking saw the establishment of many small banks between 1911-1948, with over 1000 banks formed. Central Bank of India, established in 1911, was India's first truly indigenous bank wholly owned and managed by Indians. 3. Major banking reforms began after independence, including nationalizing the Imperial Bank of India in 1955 and forming the State Bank of India, as well as nationalizing major commercial banks in 1969.

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    What Is A Bank: Banking & Financial Awareness

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    BABLA MONDAL
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    1. A bank is a financial institution that accepts deposits and uses those deposits to make loans and other investments. The oldest bank still in existence in India is State Bank of India, which was formed in 1955 from the merger of three presidency banks established in the 18th century. 2. The first phase of Indian banking saw the establishment of many small banks between 1911-1948, with over 1000 banks formed. Central Bank of India, established in 1911, was India's first truly indigenous bank wholly owned and managed by Indians. 3. Major banking reforms began after independence, including nationalizing the Imperial Bank of India in 1955 and forming the State Bank of India, as well as nationalizing major commercial banks in 1969.

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    Banking History

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    Banking History

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    1. A bank is a financial institution that accepts deposits and uses those deposits to make loans and other investments. The oldest bank still in existence in India is State Bank of India, which was formed in 1955 from the merger of three presidency banks established in the 18th century. 2. The first phase of Indian banking saw the establishment of many small banks between 1911-1948, with over 1000 banks formed. Central Bank of India, established in 1911, was India's first truly indigenous bank wholly owned and managed by Indians. 3. Major banking reforms began after independence, including nationalizing the Imperial Bank of India in 1955 and forming the State Bank of India, as well as nationalizing major commercial banks in 1969.

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    © All Rights Reserved
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    35 views3 pages

    What Is A Bank: Banking & Financial Awareness

    Uploaded by

    BABLA MONDAL
    1. A bank is a financial institution that accepts deposits and uses those deposits to make loans and other investments. The oldest bank still in existence in India is State Bank of India, which was formed in 1955 from the merger of three presidency banks established in the 18th century. 2. The first phase of Indian banking saw the establishment of many small banks between 1911-1948, with over 1000 banks formed. Central Bank of India, established in 1911, was India's first truly indigenous bank wholly owned and managed by Indians. 3. Major banking reforms began after independence, including nationalizing the Imperial Bank of India in 1955 and forming the State Bank of India, as well as nationalizing major commercial banks in 1969.

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    of 3

    BANKING & FINANCIAL AWARENESS

    What is a Bank etc. had been carrying on the business of banking


    since ancient times. These indigenous bankers
    Finance is the life blood of trade, commerce and included very small money lenders to shroffs with
    industry. Now-a-days, banking sector acts as the huge businesses, who carried on the large and
    backbone of modern business. Development of any specialized business even greater than the business
    country mainly depends upon the banking system. of banks.
    The term bank is derived from the French word  The origin of western type commercial
    Banco which means a Bench or Money exchange Banking in India dates back to the 18th
    table. In olden days, European money lenders or century.
    money changers used to display (show) coins of  The story of baking starts from Bank of
    different countries in big heaps (quantity) on Hindustan established in 1770 and it was
    benches or tables for the purpose of lending or first bank at Calcutta under European
    exchanging. management.
    A bank is a financial institution which deals  In 1786 General Bank of India was set up.
    with deposits and advances and other related
    services. It receives money from those who want to Since Calcutta was the most active trading port in
    save in the form of deposits and it lends money to India, mainly due to the trade of the British Empire,
    those who need it. it became a banking center.

    Definition of a Bank  There Presidency banks were set up under


    According to Oxford Dictionary bank is “an charters from the British East India
    establishment for custody of money, which it pays Company Bank of Calcutta in 1806, Bank of
    out on customer's order." Bombay in 1840 and the Bank of Madras in
    1843. These worked as quasi central banks
    in India for many years.
    Finally we can say that, “a bank is a financial  The Bank of Calcutta established in June
    intermediary that accepts deposits and channels 1806 immediately became Bank of Bengal.
    those deposits into lending activities. Banks are a  In 1921 these 3 banks merged with each
    fundamental component of the financial system, and other and Imperial Bank of India got birth.
    are also active players in financial markets. The It is today’s State Bank of India.
    essential role of a bank is to connect those who have  The name was changed after India’s
    capital (such as investors or depositors), with those Independence in July 1955. So State bank of
    who seek capital (such as individuals wanting a loan, India is the oldest Bank of India.
    or businesses wanting to grow).”  In 1839, there was a fruitless effort by
    Indian merchants to establish a Bank called
    Banking History Union Bank. It failed within a decade.
     Next came Allahabad Bank which was
    During the middle of the 12th century, banking established in 1865 working even today.
    spread in different European countries particularly  The oldest Public Bank in India having
    in Italy, "Bank of Venice" is probably the first public branches all over India and serving the
    banking institution founded in 1157. customers for the last 148 years is Allahabad
    Bank. Allahabad bank is also known as one
     In 1401, the Bank of Barcelona was founded. of India’s Oldest Joint Stock Bank.
    In 1407, the Bank of Saint George was What is joint stock commercial Bank
    founded in Genoa. A joint stock commercial bank is owned by several
     In 1609 the Amsterdamsche Wisselbank different investors. These investors may be private
    (Amsterdam Exchange Bank) was founded companies located in foreign countries,
    which made Amsterdam the financial centre governments, or individuals. Ownership is typically
    of the world until the Industrial Revolution. obtained through the purchase of bank stock or
     The Bank of England was established in equity. Each investor owns a certain percentage of
    1694. the bank's overall equity.

    Indian Banking History


    Form the ancient times in India, an indigenous  The Oldest Joint Stock bank of India was
    banking system has prevailed. The businessmen Bank of Upper India established in 1863 and
    called Shroffs, Seths, Sahukars, Mahajans, Chettis failed in 1913. After that some of its assets

    Dr. Ram Mehar Arya Page 1


    BANKING & FINANCIAL AWARENESS

    and liabilities being transferred to the Kannada and Udupi district. It was the
    Alliance Bank of Shimla. undivided Dakshina Kannada district. It was
    renamed as Dakshina Kannada in 1947.
    Alliance Bank of Simla (Shimla) Four banks started operation during the
    The Alliance Bank of Simla was a British-run though period of Swedeshi Movement and so this
    India-registered bank that commenced operations in was known as “Cradle of Indian
    Simla 1874 under the management of Mr. James Banking.
    Walker. It was established to take over the business of
    the United Bank of India, established in 1866, with This was the first phase of Indian banking which was
    operations in Simla (Shimla) and Umballa (Ambala, a very slow in development. This era saw many ups
    Haryana). Its board put the United Bank of India in and downs in the banking scenario of the country.
    voluntary liquidation on Saturday 21 March, and The Second Phase starts from 1935 when Reserve
    Alliance Bank commenced operations on Monday, 23 bank of India was established. Between the periods
    March. The Alliance Bank failed on 27 April 1923 due of 1911-1948, there were more than 1000 banks in
    to speculation by its management. At the time that it India, almost all small banks.
    failed it had 36 branches, including ones in Lahore,
    Lucknow, Peshawar, Rawalpindi, and Rangoon.  The Reserve Bank of India was constituted
    in 1934 as an apex Bank, however without
    major government ownership. Government
     The first Bank of India with Limited Liability of India came up with the Banking
    to be managed by Indian Board was Oudh Companies Act 1949. This act was later
    Commercial Bank. It was established in 1881 changed to Banking Regulation
    at Faizabad. This failed in 1958. (Amendment) Act 1949.
     The first bank purely managed by Indian  The Banking Regulation (Amendment) Act
    was Punjab National Bank, established in of 1965 gave extensive powers to the Reserve
    Lahore in 1895. The Punjab national Bank Bank of India. The Reserve Bank of India
    has not only survived till date but also is one was made the Central Banking Authority.
    of the largest banks in India.
     However, the first Indian commercial bank The banking sector reforms started immediately
    which was wholly owned & managed by after the independence. These reforms were basically
    Indians was Central Bank of India which aimed at improving the confidence level of the public
    was established in 1911. as most banks were not trusted by the majority of
     So this bank is called India’s First Truly the people. Instead, the deposits with the Postal
    Swadeshi bank. Central, Bank of India was department were considered safe.
    dreams come true of Sir Sorabji
    Pochkhanawala, founder of the Bank. Sir  The first major step was Nationalization of
    Pherozesha Mehta was the first Chairman of the Imperial Bank of India in July 1955 via
    this Bank. State Bank of India Act.
     Many more Indian banks were established  State Bank of India was made to act as the
    between 1906-1911. This was the era of the principal agent of RBI and handle banking
    Swadeshi Movement in India. Some of the transactions of the Union and State
    banks are Bank of India, Corporation Bank, Governments.
    Indian Bank, Bank of Baroda, Canara Bank  In a major process of nationalization, 7
    and Central Bank of India. subsidiaries of the State Bank of India were
     Bank of India was the first Indian bank to nationalized by the Indira Gandhi regime. In
    open a branch outside India in London in 1959 & 1960, 14 major private commercial
    1946 and the first open a branch in banks were nationalized. These 14 banks
    continental Europe at Paris in 1974. The Nationalized in 1969 are as follows:
    Bank was founded in September 1906 as a 1. Central Bank of India
    private entity and was nationalized in July 2. Bank of Maharashtra
    1969. Since the logo of this Bank is a star, its 3. Dena Bank
    head office in Mumbai is located in Star 4. Punjab National Bank
    House, Bandra East, Mumbai. 5. Syndicate Bank
     There was a district in Today’s Karnataka 6. Canara Bank
    state called South Canara under the British 7. Indian Bank
    empire. It was bifurcated in 1859 from 8. Indian Overseas Bank
    Canara district, thus making Dakshina 9. Bank of Baroda

    Dr. Ram Mehar Arya Page 2


    BANKING & FINANCIAL AWARENESS

    10. Union Bank


    11. Allahabad Bank
    12. Union Bank of India
    13. UCO Bank
    14. Bank of India
    The above was followed by a second phase of
    nationalization in 1980, when 6 more banks were
    nationalized. After the two major phases of
    nationalization in India, the 80% of the banking
    sector came under the public sector/ government
    ownership.

    Please note the following sequence of events:


    1. Creation of Reserve bank of India: 1935
    2. Nationalization of Reserve Bank of India: 1949
    (January)
    3. Enactment of Banking Regulation Act: 1949
    (March)
    4. Nationalization of State Bank of India: 1955
    5. Nationalization of SBI Subsidiaries : 1959
    6. Nationalization of 14 major Banks: 1969
    7. Creation for Credit Guarantee Corporation:
    1971
    8. Creation of Regional Rural Banks: 1975
    9. Nationalization of 6 more banks with deposits
    over Rs. 200 Crore: 1980 The result was
    outstanding. The public deposits in these
    banks increased by 800%, as the government
    ownership gave the public faith and trust.
    10. The third phase of development of banking in
    India started in the early 1990s when India
    started its economic liberalization.

    Dr. Ram Mehar Arya Page 3

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