History of Banking in India: All you need to know

History of Banking in India: All you need to know

by NY Mag

Today in this article I am going to talk about the Indian banking sector, how it started and what is the history of banks in India the story of how banking in India has evolved over the years, it is a fascinating story so let’s begin without wasting any time,

History of Banking in India: All you need to know

History of Banking in India

So we are beginning right at the start in ancient time to the 1700, now a lot of people will have said to you that sbibccsp East Indian Company the Europeans brought the the banking system in India, but that is not fully true because our Vedas and sutras they mention usury, so basically the usury they are actually exorbitant rates right now, however in the mediaeval times in the early times what used to happen that some classes of people were given loans by some money lenders and depending on your social class your interest rate was fixed, so that was the system under the which ancient India used to have that loan system, so we used to have it from a long long time and they also have the mentions of these kinds of banking system in the jatakas dharma shastras and also Chanakya in his books he has mention loan deeds or the “rampart” or “Navlakha”, so these were all the things that were mentioned in the mediaeval text that we have and this tells us that banking in India had propagated quite a lot in those times as well, in fact in the 12th century Indians used to do banking that is widely known, even the important thing that had developed during that time were the Hundis, so in the 12th century we used to have Hundis, which was basically credit instrument and many people believed that Hundis are the oldest credit instruments known to man and these Hundis basically used for trade transaction they were often used for transfer funds from one location to another location and they were also used to just pay of debts or they were used to take credit, so they acted as bills of exchange as well, so the Hundis were very important instruments, Both Indian and Italian have started around the same time but the Indian history was almost wiped out we must remember these things,

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Then we had in Mughal Era the loan deeds which were also known as the “datives” there were the different loan dead’s that the Mughals used to execute and and they used to have some authoritarian figure which would overseas the execution of these loans deeds, and that is how the loan system actually promulgated, and these things were done in ancient India before the East India company set foot in India and after that we know most of the things, so in 1770 Bank of Hindustan was formed, M/S Alexander and company form bank of Hindustan, in 1829 to 1832 during this time the bank was liquidated because of some crisis that had happened, in 1786 general Bank of India sbibc founded but this to failed in 1791, so both these banks they were the among the earliest official banks in India and then we go to the 1800s, so in the 1800s we seek lot of different parts of India opening up to banking they were the presidency banks and these banks were the among the first ones and which had widely gained the recognition, the first Presidency banks were, it was the bank of Kolkata in Bengal which was founded in 1806 and later on the name bank of Calcutta was changed into Bank Of Bengal this was done in 1809, then we had the bank of Bombay which was established in 1840 Bank of Madras was established in 1843 so these were the three main Presidency banks that we had in India.

So as I have explained the history of Indian banking, how it started & the few events in the history of banking in India, Thank you.

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