The history of banking in India is a journey from ancient indigenous systems to a modern, technology-driven powerhouse. Central to this transformation is the story of the Central Bank of India, an institution that stands as a symbol of national economic independence.
1. The Central Bank of India: India’s First Truly Swadeshi Bank
Established on December 21, 1911, the Central Bank of India holds a unique place in history as the first Indian commercial bank that was wholly owned and managed by Indians.
A Vision of Self-Reliance
The bank was the realisation of the dream of Sir Sorabji Pochkhanawala, who envisioned a financial institution that was the “property of the nation” and built on the trust of its people. Its first Chairman was the renowned nationalist Sir Pherozeshah Mehta.
Pioneering Innovations
From its inception, the bank focused on serving Indian businesses and the public, introducing several “firsts” in the country:
- 1912: Introduced India’s first Safe Deposit Vault.
- 1921: Launched the Home Savings Safe Deposit Scheme to encourage thrift among all sections of society.
- 1924: Created an Exclusive Ladies Department to cater specifically to women.
- 1980: Introduced Centralcard, the first credit card by an Indian bank.
2. History of the Indian Banking Sector
The development of banking in India is broadly categorised into three distinct phases.
Phase I: The Early & Pre-Independence Era (1770–1969)
Modern banking began with the Bank of Hindustan in 1770, which later failed. This era was dominated by “Presidency Banks” established by the East India Company: the Bank of Bengal (1806), Bank of Bombay (1840), and Bank of Madras (1843).
- 1921: These three Presidency Banks merged to form the Imperial Bank of India.
- 1935: The Reserve Bank of India (RBI) was established as the central banking authority.
- 1955: The Imperial Bank was nationalised and renamed the State Bank of India (SBI).
Phase II: The Nationalisation Era (1969–1991)
To drive financial inclusion and reduce the concentration of economic power, the government took control of major private banks.
- 1969: Prime Minister Indira Gandhi nationalised 14 major commercial banks with deposits over ₹50 crores.
- 1980: An additional 6 banks were nationalised, bringing the majority of the banking sector under government ownership.
Phase III: Liberalisation and the IT Revolution (1991–Present)
Following the Narasimham Committee recommendations, the 1991 reforms opened the door to private and foreign banks, sparking a competitive and modern era.
- Technological Shift: This phase saw the introduction of ATMs, internet banking, and mobile apps, transforming banking from “class banking” to “mass banking”.
- New Entities: The sector has further evolved with the introduction of specialised entities like Small Finance Banks and Payment Banks to reach the unserved sections of society.
Summary Table: Key Banking Milestones
| Milestone | Year | Significance |
| Bank of Hindustan | 1770 | First modern bank in India |
| Oudh Commercial Bank | 1881 | First bank managed by an Indian board |
| Punjab National Bank | 1894 | First bank purely managed by Indians |
| Central Bank of India | 1911 | First wholly Indian owned and managed bank |
| Reserve Bank of India | 1935 | Establishment of the central regulatory authority |
| Major Nationalization | 1969 | Government took control of 14 major banks |
