Banking History, In 1934 AD RBI act was passed to have a regulating body in British India.
Since the absence of any kind of regulating body caused serious damage to the revenue of the colonial government.
On 1st April 1935 AD RBI came into existence at Calcutta (Kolkata), later in 1937 shifted to Bombay (Mumbai)
It was established by the recommendation of “Hilton Young Commission”, set up by British people in India.
The initial capital of RBI bank was 5 Crore.
RBI has also worked as the central bank for Burma (now Myanmar) as well.
Till 1942AD after that Japanese occupied Burma and RBI suspended its operation.
Both the foreign banks and Indian banks main function was to work for merchants at that time and has no facility of depositing money with them.
It was nationalized in the year 1949 AD
Along with it Pt. Jawaharlal Nehru while working on economic policy focused on the agricultural sector.
Till then it was the only sector involved in employing almost 90% of the population.
The same year in 1949AD
BANKING REGULATION ACT
Passed to regulate and govern al the banks present in the country
Till then they were working as a private entity and provides their services only to the industrialists.
1955 AD Imperial bank was nationalized and named as STATE BANK OF INDIA
Fully owned Government bank
In 1969, during the first tenure of Indira Gandhi, 14 banks were nationalized.
They were nationalized on the terms that, the bank should have capital of Rs 50 Crores.
In which RBI played a major role as regulating the body.
Now in 1980, again 6 banks were nationalized, on the bases which have Rs 200 Crores as capital.
Through this nationalization, governments achieved certain things like
PLR (Prime Lending Rate Regulations)
Braches in rural areas
Low-interest rates on agricultural loans
Debt recovery body for NPAs
Interest subvention schemes
Banking History Before 1947 AD