History of The State Bank of India (SBI)
1 July 2021
My Dear Young and Little Indians,
1st of July is the establishment day of the State Bank of India (SBI)
State Bank of India as we know it today was formed by an Act passed in the Indian Parliament- The State Bank of India Act 1955.
History of the State Bank of India.
History of SBI dates back to the beginning of the 19th century. Remember this was the time when India was ruled by The East India Company, much before the British Raj started.
(Year 1757 to 1858 was East India Company rule. And 1858 to 1947 was British Raj. These periods are together known as Colonial period. India was controlled by powers based in Britain. India was not the seat of power it was a ‘colony’ of the British. Sad! )
Year 1806 (2 June)- Bank of Calcutta was established.
Year 1809 (2 January)- Bank of Calcutta was renamed as Bank of Bengal.
Why was the first bank established is Calcutta (now known as Kolkata) and not Delhi? ........Because Calcutta was the administrative headquarter of the British till 1931 when the capital was shifted to Delhi.
Year 1840 (15 April)- Bank of Bombay was established.
Year 1843 (1 July)- Bank of Madras was established.
For administrative purposes, the British had divided India into Presidencies- Calcutta Presidency, Bombay Presidency and Madras Presidency.
One bank was established in each of the three Presidencies. Each bank was allowed to issue its own currency coins that could be used in a limited geographical area.
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| Bank of Calcutta |
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| Bank of Bombay |
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| Bank of Madras |
A major change occurred with the passing of Paper Currency Act of 1861- The right to issue currency of the presidency banks was abolished and the Government of India assumed from 1 March 1862 the sole power of issuing paper currency within British India.
The three presidency banks now started functioning as commercial banks--- taking deposits in the currency issued by the Govt and lending money to businesses in the same currency.
Year 1921 (27 January) – All the three presidency banks were amalgamated (merged) and a new bank The Imperial Bank of India was created. This bank acted as a commercial bank and also assisted Govt of India with issuing and circulating currency notes.
The Imperial Bank of India
Year 1935 (April 1) - The Reserve Bank of India (RBI) came into existence. It took over from the Govt of India the business of printing currency.
Year 1955 (1 July)- The Parliament of India passed the State Bank of India Act 1955. With the passing of this Act, all business, assets and liabilities of The Imperial bank of India were transferred to the State Bank of India. The RBI took a 60% stake (share) in the bank.
Year 1959 – The Indian Parliament passed the State Bank of India (Subsidiary Banks) Act 1959 - Eight banks that were promoted and owned by rulers of princely states now became subsidiaries of SBI.
(A subsidiary company is a company which is owned by some other company. In this case the SBI became the owner of banks that were till now owned by rulers of princely states).
These eight banks were renamed by pre-fixing ‘State Bank’ to the name of the princely state-
State Bank of Indore
State Bank of Jaipur
State Bank of Bikaner
State Bank of Mysore
State Bank of Travancore
State Bank of Saurashtra
State Bank of Patiala
State Bank of Hyderabad
Year 2007- The Reserve Bank of India transferred its share in SBI to the Govt of India.
RBI is a regulator of commercial banks hence it made sense for RBI to NOT have any commercial interest in banks. (RBI is like the Umpire in a cricket match. If the Umpire is one of the players then people may doubt the integrity of the Umpire).
State Bank of India takes pride in being the Banker to every Indian.
Year 2017-- All subsidiary banks were merged with SBI to form one bigger bank that will be better placed to compete with global banks and be the Indian Bank of the world.
My Dear Indians,
Whatever we see around us today in our country was not built overnight. Its takes time, energy and a lifetime of effort.
It is our Moral duty to take pride in our National Assets and Achievements.
Indians have created these National Assets with their sweat and blood.
It is our National duty to contribute, in whichever way possible, to making India better.
Jai Hind !
Gaurav Negi
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