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State Bank ofIndiaponsibility
oftheReserv e
Ba nk ofIndia,ich in
1935
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formallytook overthes
eGovernmentof IndiaATMs,
with theprivate and
foreign banks
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holding18.2% and6.5%
respectively.Bank of
BengalBankof
BombayBank
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of Madrasreebanksmerged in
1925 toform
theImper ia lBa nk of
In diaich,
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uponIndia'sAllahabad
BankAmerican
Civil Warstopped the
supply of
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cottontoLancashirefrom
theConfederate States,
promotersopened
banks to
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financetrading inIndian
cotton. Withlarge
exposure tospeculative
ventures,
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most ofthe banksopened in
India duringthat period
failed. Thedepositors
lost money
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and lostinterestinkeeping
deposits withbanks.
Subsequently, banking in
India
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remained theexclusivedomain
of Europeansfor next
severaldecades until
the
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beginning ofthe 20thcentury.Forei
gn banks toostarted to
arrive,particularly
inCalcutta, in
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the 1860s.TheComptoire
d'Escomptede
Parisopeneda branch in
Calcutta in
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1860, andanotherinBombayin
1862;branches
inMadrasandPondicherry,
then a
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Frenchcolony,followed.
Calcutta wasthe most
activetrading port
in India,
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mainly dueto the tradeof theBritish
Empire, andso became
a bankingcenter.Aroun
d the turn of
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the 20thCentury, theIndian
economy waspassing
through arelative
periodof
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stability.Around fivedecades had
elapsed sincetheIndian
Mutiny, andthe social,
industrialand
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otherinfrastructure had
improved.Indians had
establishedsmall banks,
most of
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whichservedparticularethnic and
religiouscommunities.
Thepresidency
banks
-
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dominatedbanking inIndia but
there werealso some
exchangebanks anda
number of
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Indianjointstock banks.All these
banksoperated in
differentsegments of
theeconomy.
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Theexchangebanks,
mostlyowned by
Europeans,concentrated
on financing
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foreigntrade.Indian jointstock banks
weregenerally
undercapitalized
and lacked
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theexperienceandmaturity
to competewith the
presidencyand
exchange
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banks. Thissegmentation let Lord
Curzontoobserve,
"In respect ofbanking it
seems weare behind
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the times.We are likesome
old fashioned sailing
ship, dividedby solid
woodenbulkheads
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into separateandcumbersome
compartments."
By the1900s, the
marketexpanded
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with theestablishment of banks
suchasPunjab
NationalBank , in 1895 in
Lahore
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andBank ofIndia, in1906,
inMumbai-both of
which werefounded
under
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privateownership.Punjab
NationalBank is the
firstSwadeshi
Bank
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founded bytheleaderslike Lala
Lajpat Rai,Sardar Dyal
SinghMajithia.
TheSwadeshi
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movement inparticular inspired local
businessmenand political
figures tofound banks
of and for the
-
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Indiancommunity.Anumber of
banksestablished
then havesurvived to
the present
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such asBankofIndia,Corpor
ationBank ,Indian
Bank,Bank ofBaroda,Cana
ra
http://en.wikipedia.org/wiki/Bank_of_Indiahttp://en.wikipedia.org/wiki/Bank_of_Indiahttp://en.wikipedia.org/wiki/Bank_of_Indiahttp://en.wikipedia.org/wiki/Corporation_Bankhttp://en.wikipedia.org/wiki/Corporation_Bankhttp://en.wikipedia.org/wiki/Corporation_Bankhttp://en.wikipedia.org/wiki/Indian_Bankhttp://en.wikipedia.org/wiki/Indian_Bankhttp://en.wikipedia.org/wiki/Indian_Bankhttp://en.wikipedia.org/wiki/Bank_of_Barodahttp://en.wikipedia.org/wiki/Bank_of_Barodahttp://en.wikipedia.org/wiki/Canara_Bankhttp://en.wikipedia.org/wiki/Canara_Bankhttp://en.wikipedia.org/wiki/Bank_of_Indiahttp://en.wikipedia.org/wiki/Bank_of_Indiahttp://en.wikipedia.org/wiki/Bank_of_Indiahttp://en.wikipedia.org/wiki/Corporation_Bankhttp://en.wikipedia.org/wiki/Corporation_Bankhttp://en.wikipedia.org/wiki/Corporation_Bankhttp://en.wikipedia.org/wiki/Indian_Bankhttp://en.wikipedia.org/wiki/Indian_Bankhttp://en.wikipedia.org/wiki/Bank_of_Barodahttp://en.wikipedia.org/wiki/Bank_of_Barodahttp://en.wikipedia.org/wiki/Canara_Bankhttp://en.wikipedia.org/wiki/Canara_Bank
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Bank andCentral Bank ofIndia.The
fervour ofSwadeshi
movementlead to
establishing
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of manyprivate banksinDakshina
Kannada 8
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andUdupidistrictwhichwere unifiedearlier andknown by
thenameSouth Canara
http://en.wikipedia.org/wiki/Udupi_districthttp://en.wikipedia.org/wiki/Udupi_districthttp://en.wikipedia.org/wiki/Udupi_districthttp://en.wikipedia.org/wiki/Udupi_district
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( SouthKanara )district.Four
nationalisedbanks started
in this districtand also a
leading
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privatesector bank.Hence
undividedDakshina
Kannadadistrict is
known as
-
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"Cradle ofIndianBanking".
From WorldWar I toIndependen
ce :
-
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The periodduringtheFirst
WorldWar (1914-
1918)through the
end of
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theSecondWorld War(1939-1945),
and twoyears
thereafteruntil
theindepend
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enceof Indiawerechallenging
for Indianbanking. The
years of theFirst World
War were
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turbulent,and it took itstoll with
bankssimplycollapsing
despitetheIndian
economygain
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between1913 and1918 as
indicated inthe
followingtable:
-
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YearsNumberof banksthatfailedAuthoriz
ed capital(Rs.Lakhs)Paid-up
Capital(Rs.Lakhs)
1 91 3
-
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India
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1 22 74 3
5 19 1
4 42 7
1 0
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1 09 19 1
5 11 5
6 51 9
1 6
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1 32 31 4
1 91 7
9 76 2
5 1
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9 18 72 0
9 19
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54/68
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Post-independen
ce :The partition
of Indiain1947
adverselyimpacted the
http://en.wikipedia.org/wiki/Partition_of_Indiahttp://en.wikipedia.org/wiki/Partition_of_Indiahttp://en.wikipedia.org/wiki/Partition_of_Indiahttp://en.wikipedia.org/wiki/Partition_of_India
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economiesofPunjabandWest Bengal,
paralyzingbanking
activities formonths.
India'sindepe
http://en.wikipedia.org/wiki/Punjab,_Indiahttp://en.wikipedia.org/wiki/West_Bengalhttp://en.wikipedia.org/wiki/Indian_independence_movementhttp://en.wikipedia.org/wiki/Punjab,_Indiahttp://en.wikipedia.org/wiki/West_Bengalhttp://en.wikipedia.org/wiki/Indian_independence_movement
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ndencemarked the end ofa regime of
theLaissez-fairefor the
Indianbanking.
TheGovernm
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ent ofIndiainitiatedmeasures to
play anactive role in
the economiclife of the
nation, and
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the IndustrialPolicyResolution
adopted bythegovernme
nt in 1948envisaged
amixed
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economy.This resultedinto greater
involvementof thestate in
differentsegments of
the economy
http://en.wikipedia.org/wiki/Mixed_economyhttp://en.wikipedia.org/wiki/Mixed_economy
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includingbanking andfinance. The
major stepstoregulate
bankingincluded:
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In 1948,theReserveBank of
India,India'scentral
bankingauthority,
was
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nationalized,and itbecame an
institutionowned by the
Governmentof India.
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In 1949, theBankingRegulation
Act wasenacted
whichempowered
the Reserve
-
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Bank of India(RBI) "toregulate,
control, andinspect the
banks inIndia."
-
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The BankingRegulationAct also
provided thatno new bank
or branch ofan
existing ban
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k could beopenedwithout a
license fromthe RBI, and
no twobanks could
