The origin of Banking in India

gowritells By gowritells, 7th May 2015 | Follow this author | RSS Feed | Short URL
Posted in Wikinut>Guides>History

The most important section of the Financial System is Banking.It provides loans by accepting certain deposits and also provides many valuable services to its clients.
Here we can know more about the banking system in India


The origin of banking in India can be seen since the Vedic period.
Manu was a great Hindu jurist and the banking system which is nothing but lending money had transformed to proper banking before the birth of Manu.
This great jurist ,took great interest in explaining about banking, deposits,advances and even laid down certain rules on rates of interest.

Indian Economy

The economy of the country was given importance through out the Mauryan period.Later on the desi bankers played some role in the economy of the country.However, it was during the Mughal Period that Indigenous bankers started playing vital role in the lending money and financing of the foreign trade and commerce.

We are all well aware of the stories of Birbal ,the minister of Akbar, who keeps solving the financial problems concerned with lending of money in most of the stories.So the system of depositing and lending money was much popular in Mughal period which can be seen even in the stories.

Indigenous banks

Indigenous bank is nothing but MONEY LENDERS. They were also well known as SAHUKARS.
Who ever was in need of money, which was in huge quantities would meet the sahukar.These people would provide the money required but in return took a deposits in the form of lands,jewellery,houses etc.
Thus, they would provide loans with certain deposits. These indigenous banks were more known to people in villages and small towns.
Their activities were a mixture of banking,financing and trading.
These are also known by the names such as Marwadis,Multanis,Shroffs,Seths,Chettis,Mahajans etc. They are very much popular for lending money even today but they didn't develop as perfect bankers or could not develop their banking system in India.

They were many films and novels about the sahukars who were mostly said to be cunning in the story as they would show no mercy for the depositors who wouldn't return the money on time.Thus, they couldn't develop good will among the public.

First bank in India

According to the definition of banking, the first bank developed in the modern times was the General bank of India which was developed in the year 1786,though the Hindusthan bank was established earlier in 1770,it didn't follow the few basic tenets of the banking.
Three Presidency banks : Bank of Bengal ,Bank of Mumbai,Bank of Madras were later set up.
These acted as quasi central banks for sometime during the British rule.
These three banks merged to form the IMPERIAL BANK OF INDIA which is now called the STATE BANK OF INDIA.


Advances, Banks, Commerce, Foriegn Trade, Interests, Lending, Loans, Money

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writing is my passion and I am glad when readers find my pages interesting or inspiring.

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author avatar Retired
7th May 2015 (#)

How interesting! And I enjoyed the history lesson!

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