Banking industry in India developed on a modern basis after the origination of banks like Bank of Hindustan (1770-1829) and The General Bank of India, established 1786 Later, three presidency banks under Presidency Bank's act 1876 i.e. Bank of Calcutta, Bank of Bombay and Bank of Madras were set up, which laid foundation for modern banking in India. In 1921, all presidency banks were amalgamated to form the Imperial Bank of India. Imperial bank carried out limited number of central banking functions prior to establishment of RBI. It engaged in all types of Commercial banking, business except dealing in foreign exchange. The Imperial Bank of India, which upon India's independence, became the State Bank of India in 1955.
Some of the prominent banks where established during the commercial era, namely The Allahabad Bank, which was established in 1865 is one of the oldest Joint Stock bank in India, and is still functioning today. The Punjab National Bank established in Lahore in 1895, is now one of the largest banks in India. The Swadeshi movement inspired local businessmen and political figures to found banks of and for the Indian community. A number of banks established then have survived to the present such as Bank of India, Corporation Bank, Indian Bank, Bank of Baroda, Canara Bank and Central Bank of India.
After the partition of India, the government took drastic steps to regulate the banking industry. Additional powers and authority were vested in the Reserve bank of India to monitor the functioning of the entire banking system. The passing the Banking regulations act in 1949, empowered RBI to further regulate, inspect, and control Indian banks. The Government of India initiated measures to play an active role in the economic life of the nation, and the Industrial Policy Resolution adopted by the government in 1948 envisaged a mixed economy. This resulted into greater involvement of the...