Evolution of Banking In India

Money Lenders
Indian Money market before British rule was made
up of money lenders and indigenous bankers.
Money lenders normally work on their own capital
Money lenders don’t discount the hundis
Money lenders lend money for domestic and for
trade purpose.
Money lenders do not care for the purpose of the
loan
 Evolution of Banking In India
- Indigenous Bankers
 These bankers accept deposits from the
public
 They discount the hundis from the public
 Finance is given for trade and commerce.
 Are very careful about the purpose lending
 Their business is held on a wider scale.
 Modern Joint Stock Company
 Starterd in the year 1770
 Also called as Bank of Hindustan
 In the beginning issued notes valuing Rs.
20 lakhs .
 Commercial Banks
 Bank of Bengal and the Central Bank of
India were established in the year 1785
 During 1829-32 They were closed down
due to Financial crises.
 Bank of Bengal
 Also called as Presidency banks
 Started in the year 1806
 Formed through the charter issued by the
East India Company.
 The bank had a Capital of Rs. 50 Lakhs
 Bank of Bombay
 The first Bank of Bombay was established
in the year 1840
 The second Bank of Bombay was
established in the year 1868
 Bank of Madras followed and many other
banks were also started
 They were all started by the Britishers
 The Reserve Bank of India
 Started on 1st April 1935
 Was a private shareholders bank
 The paid capital was Rs. 5 Crores (divided
into shares of Rs. 100 fully paid up)
 The shares were divided between five
zones equally
 It had 5 offices in five zones namely
Bombay, Delhi, Calcutta, Mandras and
Rangoon.
 RBI before Independance
 No independent existence
 Subordinate branch of the Bank of
England
 During the world war II, it worked as a note
printing Press for the Govt. of India under
the control of the British Government.
 Could not control the activities of Money
Lenders
 Functions of RBI (After the
Independence)
 Acts as a Central Bank of India
 Has a monopoly of note issue
 It is the BANKER BANK
 It is the controller of Credit
 Safeguards the economic condition of the
country.