History of Indian Banking and Reforms– Indian Economy UPSC Notes

History of Indian Banking and Reforms Early Banking in India (18th-19th Century) Modern banking in India started in the 18th century with British trading companies (called "Agency Houses") in Calcutta and Bombay. In the 19th century , three major banks were established: Bank of Bengal (1806) Bank of Bombay (1840) Bank of Madras (1843) These banks later merged in 1921 to form the Imperial Bank of India , which functioned like a regular commercial bank and also took on some responsibilities of a central bank. Pre-Independence Banking (Before 1947) By the time India became independent in 1947 , there were over 600 banks operating in the country. However, most of these banks focused on giving loans to large businesses and traders, neglecting farmers and small businesses . To fix this, the government nationalized the Imperial Bank of India in 1955 , turning it into the State Bank of India (SBI) to serve more people, especially in rural areas. Bank Nationalization (1969 & 1980) Even after SBI …