History of Indian Banking System
The 1st bank in India was the General Bank of India. It was established in 1786. The East India Company established Bank of Bombay (1840), Bank of Madras (1843) and The Bank of Bengal/Calcutta (1809). Bank of Hindustan was established in the year 1870. These three individual units were known as Presidency Banks. Allahabad Bank was established in the year 1865. Punjab National Bank Ltd. was set up in the year 1894 with its head quarters at Lahore. Between 1906 & 1913, Central Bank of India, Bank of India, Bank of Baroda, Indian Bank, Bank of Mysore and Canara Bank were set up. In the year 1921, all presidency banks were merged to form the Imperial Bank of India which was run by European Shareholders. Thereafter, Reserve Bank of India was established in the year 1935.
Classification of Indian Banks
Indian Banks are classified into:
Commercial banks comprise:
1) Schedule commercial banks
Schedule commercial banks are classified into:
• Private banks
• Public banks
• Foreign banks
• Regional rural banks
2) Non-scheduled commercial banks
Co-operative banks include:
• Urban co-operative banks
• Rural co-operative banks
Scheduled Banks: Scheduled Banks comprises those banks which have been incorporated in the 2nd schedule of Reserve Bank of India act 1934. Reserve Bank of India in turn includes only those banks in this schedule which suit the criteria laid down under section 42(6a) of the Act.
Regional Rural Bank: The Indian government set up RRBs on October 2, 1975. The banks grant credit to the weaker sections of rural areas, mainly the small & marginal farmers, small entrepreneurs and agricultural laborers.