#history
State Bank of India.
The British Empire in India was administered under three Presidencies – Bengal, Bombay and Madras. Each Presidency had its own bank.
In order to establish a central bank for the whole of India, the Imperial Bank of India was created on 27th January 1931, by merging the three Presidency banks – the Banks of Bengal, Bombay and Madras.
In the 18th century, when the British East India Company began spreading its tentacles in India, there was no uniform measure of value. The gold and silver coins that existed differed in denomination and intrinsic value, in different places of the subcontinent.
The first bank to be the set up was the General Bank of Bengal and Behar, in 1773. The aim was to standardise the Rupee, facilitate revenue collection for the Government, and render foreign remittance services to private merchants. The experiment did not succeed and collapsed in two years.
When the demand for a uniform coinage arose in 1806, the silver Rupee was officially accepted by the East India Company, as the standard unit of currency and, in 1861, the Paper Currency Act vested the sole right to issue notes with the Government.
In 1913, the renowned economist John Maynard Keynes had argued in his landmark paper ‘Indian Currency And Finance’, for the need for an ‘Imperial Bank of India’, wherein the three Presidency banks would be merged to handle India’s commercial and central banking.
It’s establishment was however delayed due to the World War I (1914-1919). After the war, there was increased pressure for a central bank, especially from The International Financial Conference, which intended to reset the global economic order.
The Imperial Bank of India was set up in 1921, through a Royal Charter. It was appointed as the sole banker to the government. It was also entrusted with the treasury balances.
It was also a banker’s bank, where most of the leading banks in India were required to deposit a portion of their cash balance with it. The next five years saw 100 new branches being opened across the nation.
As central banking became more complex, and needed to be kept separate from commercial banking, to avoid a conflict of interest, the Reserve Bank of India was established in 1935, to take over the central banking functions. The Imperial Bank was given the rights for commercial activities.
India became independent in 1947. The Government nationalised the Imperial Bank of India in 1955, and renamed it the State Bank of India.
Several banks have since been merged into the SBI including the State Banks of several States like State Bank of Travancore, State Bank of Mysore etc.
Today, SBI is the largest Indian bank and has a presence in several countries.
– Joy Kallivayalil.
