Immediately after the Independence, the partition of India in 1947 adversely impacted the economies
of Punjab and West Bengal by paralyzing banking activities for months.With end of British rule in
India marked the end of a regime of the Laissez-faire for the Indian banking sector.
The Government of India initiated measures to play an active role in the economic life of the nation,
and the Industrial Policy Resolution adopted by the government in 1948 envisaged a mixed
economy. To streamline the functioning and activities of commercial banks, the government of India
has came up with the Banking Companies act, 1949. The Reserve Bank of India, Indias central
banking authority, was nationalized on January 1, 1949 under the terms of the Reserve Bank of
India (Transfer to Public Ownership) Act, 1948. The Reserve Bank of India was vested with major
powers for the supervision of banking inn India as he central banking authority.
The Banking Regulation Act also provided that no new bank or branch of an existing bank could be
opened without a license from the RBI, and no two banks could have common directors.
During those days, the general public had lesser confidence in Banking. As an aftermath, the deposit
mobilization process was very slow. Moreover, the savings bank facility provided by postal
department was considered comparatively safer than banks, and funds were largely given to traders.
Post-Independence Banking History can be classified into two major categories:
Bank Nationalization in India
Bank Liberalization in India
In India, the Banking Sector has been dominated by Government or Public Sector Banks
(PSBs) for last 64 years. In 1954 the All India Rural Credit Survey Committee submitted its
report recommending creation of a strong, integrated, state-sponsored, state-partnered
commercial banking institution with an effective machinery of branches spread all over the
country. The recommendation of this committee led to establishment of first Public Sector
Bank in the name of State bank of India on July 01, 1955 by acquiring the substantial part of
share capital by Reserve Bank of India, of then Imperial Bank of India. Similarly during 195659, as a result of reorganization of princely states, the State Bank of India associate Bank
came into fold of Public sector banking.
On July 19, 1969, the Govt. promulgated Banking Companies (Acquisition and Transfer of
Undertakings) ordinance 1969 to acquire 14 bigger commercial banks with with deposits over 50
crores. The main objective behind this bank nationalisation was to spread banking The second
phase of bank nationalisation took place in 1980 during the prime ministerial tenure of Indira Gandhi,
in which 6 more banks were nationalised with deposits over 200 crores.
List of Nationalised Banks in India:
1. Allahabad Bank
2. Andhra Bank
3. Bank of Baroda
4. Bank of India
5. Bank of Maharashtra
6. Canara Bank
7. Central Bank of India
8. Corporation Bank
9. Dena Bank
10. Indian Bank
11.
12.
13.
14.
15.
16.
17.
18.
19.
Liberalisation in banking sector in India noticed in early 1990s when India adopted a new economic
policy for the development of the nation. Narasimha Rao government embarked on a policy of
liberalization, licensing a small number of private banks.For the first time in India new private banks
got license for providing banking service. These banks came to be known as the New Generation
tech-savvy banks.
The first bank in India set up after the adaptation of new liberalization policy in banking sector was
Global Trust Bank. It was later amalgamated with Oriental Bank of Commerce. The list of banks set
up after new liberalization policy includes Global Trust Bank, UTI Bank (Now known as Axis Bank),
ICICI Bank and HDFC Bank.
This move towards the Liberalisation along with the rapid economic growth in India, re-energize the
banking sector in India. Indian banking sector has noticed rapid growth with strong contribution from
all sector of banks government banks, private banks and foreign banks.
The next stage for the Indian banking sector has been set up with the proposed relaxation in the
norms for Foreign Direct Investment (FDI). All Foreign Investors in banks can holds up to 74% with
some restrictions of the company.
Initially the headquarter of RBI was in Calcutta (Now Kolkata) but in 1937 it was permanently moved to
Mumbai, Maharastra.
The Reserve Bank of India has 19 regional offices, most of them in state capitals and 9 Sub-offices
The Executive head of RBI is known as Governor.
The governor is associated by Four Deputy Governors.
The bank has also two training colleges for its officers, viz. Reserve Bank Staff College at Chennai and
College of Agricultural Banking at Pune.
RBI is a member bank of the Asian Clearing Union.
Chintaman Dwarkanath Deshmukh (C D Deshmukh) was the governor of RBI at the Time of
nationalization of RBI in 1949.
C D Deshmukh, then Governor of RBI, represented India at the Bretton Woods negotiations in 1944.
1st women Deputy Governor of RBI -K.J.Udeshi.
RBI is not a Commercial Bank.
RBI prints currency in 15 Languages.
RBI is a member of IMF (International Monetary Fund).
At present there are total 90 bank in the second schedule of Reserve Bank of India Act, 1934. [Latest
inclusion Bhartiya Mahila Bank]