The history of banks in India, from the first bank to digital banking
Moneylenders and the hundi, the first bank of 1770, the Presidency banks and the SBI, the 1969 nationalisation, Jan Dhan accounts and how your deposits are insured.
Rohit Tandon · 30 October 2026 · 4 min read
Today almost every family in India has a bank account, and money is sent and received from a phone. But this journey of banking began with the village moneylender and the traders' hundi, and has reached one of the largest banking systems in the world. Here is the history of banks in India in simple words.
Before banks: moneylenders and the hundi
In ancient and medieval India, moneylenders, seths and sarrafs lent money and kept deposits. Kautilya's "Arthashastra" also mentions rules on loans and interest. To send money from one city to another, traders used the "hundi" — a written order which, when shown, made a trader in the other city pay out the money. This removed the risk of carrying heavy coins.
The beginning of modern banks
| Year | Milestone |
|---|---|
| 1770 | The "Bank of Hindostan" in Calcutta — among India's first modern banks (closed in 1832) |
| 1806 | The "Bank of Calcutta" was set up, renamed the "Bank of Bengal" in 1809 |
| 1840, 1843 | The "Bank of Bombay" and the "Bank of Madras" were set up |
| 1921 | The three Presidency banks merged into the "Imperial Bank of India" |
| 1935 | The Reserve Bank of India was founded |
| 1 July 1955 | The Imperial Bank became the "State Bank of India" (SBI) |
So the SBI's roots go back to 1806, and it is considered India's oldest bank still in operation. Punjab National Bank, founded in Lahore in 1894, was among the first large banks built with Indian capital and run by Indians; Lala Lajpat Rai was associated with its founders. Read about the central bank in The Reserve Bank of India.
The nationalisation of banks
Even after independence, most banks were in private hands, and banking hardly reached villages, farmers and small businesses. On 19 July 1969 Prime Minister Indira Gandhi's government nationalised 14 large private banks, and 6 more on 15 April 1980. After this, bank branches opened rapidly in villages — read Key facts about Indira Gandhi.
Did you know? Under the "Pradhan Mantri Jan Dhan Yojana", launched on 28 August 2014, about 18 million bank accounts were opened in a single week — a Guinness World Record. By 2023 the number of accounts under the scheme had passed 500 million.
From liberalisation to digital banking
- After 1991: with the economic reforms, new private banks were licensed, bringing more competition and new services.
- The first ATM: India's first ATM was installed in Mumbai in 1987.
- Bank mergers: on 1 April 2020, 10 public sector banks were merged into 4 larger banks.
- New kinds of banks: "payments banks" and "small finance banks" began after 2015.
- Digital payments: UPI arrived in 2016 and put banking into the phone — read How UPI works.
How safe are your deposits?
In India, money deposited in banks is insured by the "Deposit Insurance and Credit Guarantee Corporation" (DICGC), a subsidiary of the Reserve Bank. Since February 2020, up to ₹5 lakh per depositor in each bank (principal and interest together) is insured. So even if a bank fails, this much stays safe. The story of money: The history of money.
Key points
- Before banks, there were moneylenders and the hundi system.
- The Bank of Hindostan of 1770 was among India's first modern banks.
- The SBI was formed from the Imperial Bank on 1 July 1955.
- 14 banks were nationalised on 19 July 1969.
- Up to ₹5 lakh per depositor in each bank is insured.
Frequently asked questions
Which is India's oldest bank still in operation?
The State Bank of India (SBI), whose roots go back to the Bank of Calcutta of 1806.
When were banks nationalised in India?
14 banks on 19 July 1969, and 6 more on 15 April 1980.
More articles: History · Economy questions.
Sources
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