Modern Banking system and India

The mid of the 18th century the concept of Banking system came to the mind of the intellectuals and the modern system of banking emerged in India. Among the banks The Bank of Hindustan was the first known bank, was established in 1770 and emerged. The oldest of all the State Bank of India established in 1806, it was earlier known as the Bank of Calcutta and later on Bank of Bengal. Founded by the presidency government The Bank of Bengal, The Bank of Madras and The Bank of Bombay was merged and known as the Imperial Bank of India.Which upon India's Independence in 1947, later on known as the State Bank of India since 1955. It was acted as quasi- central bank of India till the establishment of the Reserve Bank of India 1935, under the Reserve Bank of India act 1934.
India's banking system is classified into two groups one is scheduled and non- schedule banks. The schedule banks are also classified into Nationalised banks, State Bank of India, and its associates the , private banks and Regional Rural Banks of India and also Foreign banks.
The concept of Banking system in India has turned to a new way. India is a developing country and focusing on holistic development. Besides The country is focussing on financial freedom and prosperity. India is no more behind the world in the subject of finance. Globalization of Indian banking system and market with the concept of mixed economy and the digital system of currency exchange is seeing the flow of money in the market capital.. These are all fruitful to the growth and development of the country with the Banking system of India. The role of digital system of currency exchange as follows:-
Digital and Neo-Banking

Digital banking has grown rapidly with UPI (Unified Payments Interface), mobile wallets, net banking, and payment banks like Paytm Payments Bank and Airtel Payments Bank.

Neo-banks are fully digital, app-based banks without physical branches (e.g., Jupiter, Fi Money).

Apart from these the role of the government of India and financial inclusion and initiatives are taken by government as follows:-Jan Dhan Yojana – Aims to expand affordable access to financial services.

Aadhaar-Enabled Payment Systems (AEPS) – Uses biometric authentication.

UPI & BHIM app – Revolutionized retail payments.

 

[Priyani Gupta]

Thank you for your article on the evolution of the Indian banking system. Your overview offers a valuable snapshot of a centuries-old transformation that has turned Indian banking into a globally integrated digital financial network. That said, while the article brings out many critical historical and contemporary developments, a deeper examination of its structure, accuracy, and implications can help refine the narrative and encourage constructive dialogue.


To begin with, it’s commendable that you trace the roots of Indian banking back to the late 18th century, referencing pivotal institutions like the Bank of Hindustan and the transformation of the Bank of Calcutta into what we now know as the State Bank of India. These are historically significant details often overlooked in casual discourse. However, factually, it's important to clarify that the Reserve Bank of India was not established after independence in 1947, as one might infer from the article, but actually in 1935 under the Reserve Bank of India Act, 1934—during British rule. The RBI was nationalized only in 1949. This distinction is essential because it reveals that India had central banking capabilities even under colonial administration.


Furthermore, the sentence structure and grammar in parts of your article detract from the overall impact. Phrases such as "the Bank of Hindustan was the first known bank, was established in 1770 and emerged" and "India is no more behind the world in the subject of finance" come across as both grammatically awkward and semantically vague. A more polished articulation would not only lend credibility but also enhance readability and comprehension.


On a more practical note, your mention of digital banking innovations like UPI, AEPS, and neo-banks is highly relevant. These systems have revolutionized everyday financial transactions in India, promoting inclusivity and transparency. The Jan Dhan Yojana, for instance, has brought millions of unbanked citizens into the financial fold, thereby supporting the government's push toward a cashless economy. This democratization of banking services is truly commendable and reflects the strength of India’s policy framework in driving tech-enabled development.


Now, to add a little constructive controversy: while the digital banking ecosystem is indeed a milestone, it isn't without risks. Increasing digitization has raised concerns over data privacy, cybersecurity, and financial fraud—areas that require much stronger regulatory oversight and public awareness. Moreover, many rural regions still face issues like internet connectivity and digital illiteracy, thereby excluding segments of the population from fully benefiting from these advancements. Is the digital divide silently perpetuating financial exclusion even as we tout inclusion?


Finally, your concluding tone—celebratory of India’s financial progress—is well-placed but perhaps slightly overconfident. India is advancing rapidly, but being "no more behind the world" is a sweeping statement that may not reflect the nuanced economic and financial disparities still present in the country. Progress, while impressive, must be matched with systemic reforms, transparent governance, and equitable access.


In conclusion, your article initiates an important conversation. With a few factual corrections, improved language flow, and a balanced critique of India’s digital banking landscape, it can evolve from a good summary into a compelling, thought-provoking piece.

 

[LekshmiGPilllai]

Thank you for your article on the evolution of the Indian banking system. Your overview offers a valuable snapshot of a centuries-old transformation that has turned Indian banking into a globally integrated digital financial network. That said, while the article brings out many critical historical and contemporary developments, a deeper examination of its structure, accuracy, and implications can help refine the narrative and encourage constructive dialogue.


To begin with, it’s commendable that you trace the roots of Indian banking back to the late 18th century, referencing pivotal institutions like the Bank of Hindustan and the transformation of the Bank of Calcutta into what we now know as the State Bank of India. These are historically significant details often overlooked in casual discourse. However, factually, it's important to clarify that the Reserve Bank of India was not established after independence in 1947, as one might infer from the article, but actually in 1935 under the Reserve Bank of India Act, 1934—during British rule. The RBI was nationalized only in 1949. This distinction is essential because it reveals that India had central banking capabilities even under colonial administration.


Furthermore, the sentence structure and grammar in parts of your article detract from the overall impact. Phrases such as "the Bank of Hindustan was the first known bank, was established in 1770 and emerged" and "India is no more behind the world in the subject of finance" come across as both grammatically awkward and semantically vague. A more polished articulation would not only lend credibility but also enhance readability and comprehension.


On a more practical note, your mention of digital banking innovations like UPI, AEPS, and neo-banks is highly relevant. These systems have revolutionized everyday financial transactions in India, promoting inclusivity and transparency. The Jan Dhan Yojana, for instance, has brought millions of unbanked citizens into the financial fold, thereby supporting the government's push toward a cashless economy. This democratization of banking services is truly commendable and reflects the strength of India’s policy framework in driving tech-enabled development.


Now, to add a little constructive controversy: while the digital banking ecosystem is indeed a milestone, it isn't without risks. Increasing digitization has raised concerns over data privacy, cybersecurity, and financial fraud—areas that require much stronger regulatory oversight and public awareness. Moreover, many rural regions still face issues like internet connectivity and digital illiteracy, thereby excluding segments of the population from fully benefiting from these advancements. Is the digital divide silently perpetuating financial exclusion even as we tout inclusion?


Finally, your concluding tone—celebratory of India’s financial progress—is well-placed but perhaps slightly overconfident. India is advancing rapidly, but being "no more behind the world" is a sweeping statement that may not reflect the nuanced economic and financial disparities still present in the country. Progress, while impressive, must be matched with systemic reforms, transparent governance, and equitable access.


In conclusion, your article initiates an important conversation. With a few factual corrections, improved language flow, and a balanced critique of India’s digital banking landscape, it can evolve from a good summary into a compelling, thought-provoking piece.

Thank you, Priyani, for your detailed and constructive feedback. I truly appreciate the time you took to not only read the article but also to provide such insightful commentary on both the content and its presentation.

You're absolutely right about the establishment of the Reserve Bank of India in 1935 during British rule. I regret the oversight in how it was phrased and appreciate you pointing it out. It’s an important clarification, especially when discussing the evolution of India's central banking system.

Your observations regarding grammar and sentence structure are well taken. I agree that a more refined writing style could enhance clarity and credibility, and I will certainly work on improving that in future posts.

I’m also grateful that you highlighted the positive impact of digital banking in India, especially tools like UPI, AEPS, and the Jan Dhan Yojana. These innovations have indeed brought significant changes to the financial ecosystem. At the same time, your cautionary note on the digital divide and cybersecurity risks brings necessary balance to the discussion—something we must all acknowledge and address as we move forward.

Lastly, thank you for challenging the tone of overconfidence. It reminds me that while it's essential to celebrate progress, it is equally important to recognize ongoing challenges. Only then can we strive for truly inclusive and sustainable development.

Looking forward to more such enriching exchanges on this platform.