INDIAN FINANCIAL SYSTEM PRESENTATION

TOPIC- EVOLUTION OF BANKING OF INDIA

PRESENTED BY
(GROUP- 8)
NIKITA CHAUDHARY (1776088)
NILANJAN ADGIRI (1776089)
R VEDANT (1776098)
EARLY STAGE OF BANKING (UPTO 1947)

1st bank of the joint stock variety : Bank Of Bombay, 1720

Bank Of Hindustan in Calcutta, 1770-1832

The General Bank of Bengal and Bihar, 1773

 PRESIDENCY BANK

Bank of Bengal, 2 June, 1806 (first Presidency Bank) - Capital of Rs. 50 lakhs Government
subscribed its 20% share and voting rights, task of discounting the Treasury Bills to
provide accommodation to the govt., has powers to issue notes, Issued currency notes.
Bank of Bombay (2nd presidency bank), 1840 - capital of Rs. 52 lakhs
Bank of Madras (3rd presidency bank), 1843 - capital of Rs. 30 lakhs (called presidency
banks because they were set up in the presidencies that were units of administrative
jurisdiction in the Country for East India Company)

These banks were governed by Royal Charters

New Bank of Bombay, 1868

 PRESIDENCY BANK

The Presidency Bank Act came in existence in 1876 which brought 3 Presidency Banks
under a common statute and imposed some restrictions on their business.
It prohibited them from dealing with risky business of foreign bills and burrowing
abroad for lending more than 6 months.

First Indian owned bank - Bank of Allahabad, 1865

2nd - Punjab National Bank, 1895 (Lahore)
3rd - Bank of India, 1906 (Mumbai)
All these formed under private ownership
 SWADESHI MOVEMENTS (commercial banks)

Swadeshi Movement of 1906 provided a great impetus to more Indian commercial banks
such as: Bank of India, Bank of Baroda, Canara Bank, Indian Bank and Bank of Mysore
(1906 and 1913)

By the end of 1913, total no. of reporting commercial banks reached 56 comprising 3
presidency banks, 18 Class A banks (5lakhs +), 23 class B banks (1 lakhs to 5 lakhs) and 12
Exchange Banks (foreign owned banks) - engaged mainly in foreign exchange business in
terms of foreign bills of exchange and foreign remittances for travel and trade

Class A and B were joint stock banks

 SWADESHI MOVEMENTS (cooperative societies)

The Swadeshi Movement also provided impetus to the cooperative societies (agriculture
co-operatives and urban co-operatives)
1st registered Urban co-operative - Conjeevaram Urban Co-operative Bank, State of
Madras
2nd - Peoples' Co-operative Society (1905), Bangalore, State of Mysore
these co-operative societies were established to cater the needs of lower and middle-
income strata of society and to inculcate banking habits among the middle-class.
602 urban co-operative credit societies constituted a meager 4.4% of the 13,745
agricultural credit societies.
Apart from commercial and co-operative banks, several other types of banks existed in
India. (loan companies, indigenous bankers and Nidhis)
BANKING IN THE YERARLY YEARS OF INDEPENDENT INDIA- (1947 to 1967)

1. When the country attained independence, Indian banking was entirely in

the private sector.
2. All other commercial banks were also in the private sector and had a
regional character; most of them held deposits of less than Rs.50 crore.
3. Reserve Bank was also not completely State owned until it was
nationalized in terms of the Reserve Bank of India (transfer to Public
Ownership) Act, 1948.
4. At the time of independence, the banking structure was dominated by the
domestic scheduled commercial banks.
BANKING IN THE YERARLY YEARS OF INDEPENDENT INDIA- (1947 to 1967)

AMALGAMATION

LIQUIDATION
 SOCIAL CONTROL OVER BANKS (1967 to 1991)

What is Social Control over Banks?

Nationalization

STEP-1 STEP-2
1969 1980
14 Banks 6 Banks
>50 Cr >200 Cr
 SOCIAL CONTROL OVER BANKS (1967 to 1991)

REASONS
5.6 Lakh 5000 Banking
1. Economic Power. Villages Facilities.
2. Urban Bias. Small
2.2%Scale Industries
to Agriculture
Ammedabad
th Agriculture
sector
Export
3. Neglect of Agriculture 1/7 Bombay
Share of Total
ExportCalcutta
4. Neglect of Priority Sector.
Delhi
5. Violation of Rules Banking Facilities.
Madras
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