Growth_of_Banking_in_India-Overview with origin

1. ORIGIN AND GROWTH OF
BANKING IN INDIA
• Understanding how the Indian banking system evolved from traditional
moneylenders and indigenous bankers to modern digital institutions.

2. MEANING AND DEFINITION
OF BANKING
• Definition (Banking Regulation Act, 1949): 'Banking means accepting, for the
purpose of lending or investment, deposits of money from the public,
repayable on demand or otherwise, and withdrawable by cheque, draft, or
otherwise.'
• Banks act as financial intermediaries between savers and borrowers,
mobilizing funds and facilitating payments.

3. FLOW OF FUNDS IN BANKING
SYSTEM
• Savers Bank Borrowers
→ →
• Savers deposit money Bank lends funds Borrowers use funds
→ →
productively Interest paid back to savers.
→

4. ANCIENT BANKING
PRACTICES
• During theVedic period (2000–1400 B.C.), money lending was practiced by
Shroffs, Chettis, Seths, and Sahukars.
• The 'Hundi' system was used for credit and remittance.Temples acted as early
financial centers.

5. MEDIEVAL PERIOD
(COLONIAL ERA)
• Bank of Hindustan (1770), General Bank of India (1786), and Presidency Banks
(Bank of Bengal, Bank of Bombay, Bank of Madras).These merged into the
Imperial Bank of India (1921), which became SBI in 1955.

6. MODERN BANKING ERA
(1935–1990)
• RBI established in 1935. Nationalization of Imperial Bank (1955). 14 banks
nationalized in 1969, 6 more in 1980. Expanded rural banking and credit for
small industries.

7. POST-LIBERALIZATION ERA
(1991–PRESENT)
• Entry of private and foreign banks (HDFC, ICICI, Citi). Introduction of ATMs,
online banking, and UPI. Financial inclusion through Jan DhanYojana and Aadhaar-
based services.
• Zero Balance account
• Rupay Debit Card
• Accidental Insurance Cover
• Life Insurance
• Over Draft Facility
• Direct BenefitsTransfer
• Financial Literacy Programs

8. ROLE OF RBI
• Monetary authority, issuer of currency, banker to government and banks,
regulator of credit, and promoter of financial inclusion.

9. BANKING IN THE 21ST
CENTURY
• Digital banking,AI-based services, FinTech collaborations, cybersecurity, and
ESG/Green banking initiatives.

10. SUMMARY
• Ancient India had indigenous bankers; British rule introduced structured
banking; Post-1969 nationalization made banking inclusive; Post-1991 reforms
made it competitive and digital.