Exploring the History of Banking in India: From the Bank of Hindustan to the Recent PSB Mergers

The banking journey in India started with the Bank of Hindustan in Kolkata (formerly Calcutta) in 1770, but it closed down in 1832. Then came the Presidency Banks, which were backed by the government:

1. Bank of Bengal (1806)
2. Bank of Bombay (1840)
3. Bank of Madras (1843)

These banks merged to form the Imperial Bank of India in 1927, which later became the State Bank of India in 1955.

Here are some old Indian banks you should know about:

1. Allahabad Bank (1865) – India’s oldest joint-stock bank still running
2. Oudh Commercial Bank (1881) – First limited liability bank, but failed in 1958
3. Punjab National Bank (1895) – First bank managed by Indians only

The Swadeshi movement between 1906 and 1911 led to the establishment of many banks funded by Indian businessmen and politicians.

In 1969, 14 major banks were nationalized, and 6 more joined in 1980. As of 2017, there were 27 public sector banks (PSBs). Now, there are 12 PSBs, including 7 large ones and 5 smaller ones.

The five smaller PSBs are:

1. Central Bank of India [8th largest]
2. Indian Overseas Bank [9th largest]
3. UCO Bank [10th largest]
4. Bank of Maharashtra [11th largest]
5. Punjab and Sind Bank [12th largest]

The seven large PSBs are:

1. State Bank of India (SBI)
2. Punjab National Bank (PNB)
3. Bank of Baroda (BOB)
4. Canara Bank
5. Union Bank of India (UBI)
6. Bank of India (BOI)
7. Indian Bank

Recently, the Finance Ministry announced a merger of some public sector banks, which the RBI approved. Syndicate Bank, Oriental Bank of Commerce (OBC), United Bank of India, Andhra Bank, Corporation Bank, and Allahabad Bank were removed from the Second Schedule of the RBI Act after the merger.

Here’s a summary of the merged banks:

1. PNB + OBC + United Bank of India = 2nd largest PSB
2. Canara Bank + Syndicate Bank = 4th largest PSB
3. Union Bank of India + Andhra Bank + Corporation Bank = 5th largest PSB
4. Indian Bank + Allahabad Bank = 7th largest PSB

That’s a quick overview of India’s banking history. Good luck with your studies, and stay tuned to the Pareeksha Blog for more!