Banking & Financial Awareness Module
Banking History & Nationalisation in India
The evolution of modern Indian banking traces back to the Bank of Hindostan (1770) and the amalgamation of the three Presidency Banks into the Imperial Bank of India in 1921, which later became the State Bank of India (SBI) in 1955 following the Gorwala Committee report. A defining structural transition occurred with bank nationalization: the Banking Companies (Acquisition and Transfer of Undertakings) Ordinance of July 19, 1969, nationalized 14 major commercial banks, followed by a second wave nationalizing 6 more banks in April 1980. Today, the Indian banking architecture integrates scheduled commercial banks with digital payment rails developed by NPCI, including NEFT, RTGS, and UPI.
Key Concepts & Examination Highlights
- The State Bank of India (SBI) was established on July 1, 1955, by nationalizing the Imperial Bank of India under the State Bank of India Act, 1955.
- On July 19, 1969, the Government of India nationalized 14 major commercial banks having deposits exceeding ₹50 crore each under Prime Minister Indira Gandhi.
- A second phase of bank nationalization took place on April 15, 1980, nationalizing 6 commercial banks with deposits exceeding ₹200 crore each.
- The National Payments Corporation of India (NPCI), established in 2008 by RBI and IBA under the Payment and Settlement Systems Act, 2007, launched Unified Payments Interface (UPI) in 2016.
Curriculum & Reference Sources: Reserve Bank of India History Volumes, State Bank of India Archives, and NPCI Publications.