The origin of banking in India dates back to the 18th century. However, it was the Europeans who introduced the concept of modern banking in India.
The first bank in India was the Bank of Hindustan. it was established in 1770 under the European management in Calcutta since it was the most active trading hub of the country at that time. However, it was closed down in 1829-32. Another bank i.e. the General Bank of India that was opened in 1786 also failed in 1791.
India’s largest bank which still exists, i.e. the State Bank of India was established in 1809 under the name Bank of Calcutta. However, it was soon renamed Bank of Bengal.
Bank of Calcutta was the first Presidency Bank established during the British Raj. The second Presidency Bank i.e. the Bank of Bombay was established in 1840 and the third and final Presidency Bank i.e. the Bank of Madras was established in 1843.
In 1865, Allahabad Bank was established, which is now the oldest Joint Stock Bank of India.
By 1860s, foreign banks started appearing in India. In 1860, the Comptoir d’Escompte de Paris opened its first branch in Calcutta, followed by Bombay, Madras, and Pondicherry.
In 1881, the first bank to have Indian stock in entirety i.e. Oudh Commercial Bank was established in Faizabad. Then in 1894, the Punjab National Bank was established in 1894 in Lahore.
Several new banks were established in India afterward. However, the real change came in 1935 when the Reserve Bank of India was established. At that time, i.e., in the beginning, it had a share capital of just Rs. 5 crore.
Today, there are 27 public sector banks and a total of 93 commercial banks in India.