Banking Notes / Banking Awareness / Chapter 1
Chapter 1 of 17

History & Evolution of Banking in India

From the Bank of Hindustan to nationalisation and modern reforms — the milestone timeline that Banking Awareness questions draw on most often.

📖 ~8 min read 🏛️ Banking Awareness

Introduction

Indian banking has evolved through distinct phases — from early European-managed banks, to the founding of the RBI, to nationalisation, and finally to liberalisation and digital transformation. Exam questions frequently test specific milestone years and "first" facts from this timeline.

Key Milestones

YearMilestone
1770Bank of Hindustan established in Calcutta — the first bank in India (later failed)
1806Bank of Calcutta founded (later became Bank of Bengal)
1840 / 1843Bank of Bombay and Bank of Madras established
1921Bank of Bengal, Bombay and Madras merged to form the Imperial Bank of India
1935Reserve Bank of India (RBI) established as India's central bank
1955Imperial Bank of India nationalised and renamed State Bank of India (SBI)
1969First phase of bank nationalisation — 14 major commercial banks nationalised
1975Regional Rural Banks (RRBs) established to expand rural credit access
1980Second phase of bank nationalisation — 6 more banks nationalised
1991Banking sector reforms begin (Narasimham Committee recommendations) as part of broader economic liberalisation

Why 1969 and 1980 Matter

The 1969 nationalisation (under Prime Minister Indira Gandhi) aimed to bring banking under government control to direct credit toward priority sectors like agriculture and small industry, which private banks had largely neglected. The 1980 round extended this to more mid-sized banks.

Q. Which bank is considered India's oldest surviving bank, established in 1806 (as Bank of Calcutta)?
The Bank of Calcutta (1806) eventually became the Bank of Bengal, which later merged into the Imperial Bank of India in 1921, and finally into the State Bank of India in 1955 — making SBI's lineage the oldest continuously operating banking institution in India.
⚠️ Key Insight: Don't confuse "first bank in India" (Bank of Hindustan, 1770 — which failed and closed) with "oldest surviving bank" (traced through Bank of Calcutta → SBI) — exams test this distinction frequently.
✅ Practice Focus: Exact years of nationalisation phases (1969, 1980) · Bank of Bengal-Bombay- Madras merger lineage · RBI's establishment year and context.

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