PHASES IN THE EVOLUTION OF BANKING:
The banking sector development can be
divided into three phases:
·
Phase
I: The Early Phase which lasted from 1770 to 1969
·
Phase II: The
Nationalisation Phase which lasted from 1969 to 1991
· Phase III: The
Liberalisation or the Banking Sector Reforms Phase which began in 1991 and
continues to flourish till date
Pre-Independence Era:
The East India Company established the Presidential Banks ie. Bank of Bengal, Bank of Bombay and Bank of Madras.
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1921: These three banks were merged as “Imperial Bank of India.”
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1949: RBI was nationalised under the Banking Regulation Act, 1949.
1955: The Imperial Bank of India nationalized as The State Bank of India.
- During British Era, there were 3 types of banks: Imperial Bank of India, Joint stock banks and Foreign owned Exchange Banks (To facilitate trade).
- At independence, there were 97
scheduled private banks and 557 Non Scheduled (small ) private banks organized as joint stock companies and 395 cooperative banks.
- At the time of independence, all the major banks were owned by private sector and there was almost negligible access to finance for rural areas.
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1950-60: Large no of banking failures (Out of 566 commercial banks operating in 1951, only 89 survived by 1969)
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1969: Nationalisation of 14 private banks in 1969
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1974: Narasimham Committee recommended for Regional Rural Banks (RRB) to promote Financial Inclusion, accordingly RRBs were established in 1975.
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1980 : Nationalisation of 6 more banks in taking the Nationalised banks number to 20.
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Liberalisation Period (1991-Till Date):
In 1991, Narasimham committee recommended certain reforms like entry of private sector and foreign banks in banking sector.
