History of Banking System in India Important Historical Events on Indian Banking System

Sl. 1 3 5 7 Event The first bank in India Bank of Hindustan established First general insurance company established Bombay Stock Exchange (BSE) started trading Oriental Life Insurance Company established Bank of Bengal, Bank of Madras and Bank of Bombay were merged into Imperial Bank Establishment of Hilton-Young Young Commission to suggest a central bank for the country Establishment of Reserve Bank of India as the central bank Control of Capital Issues Act imposed Establishment of Industrial Finance Corporation (IFC). Imperial Bank taken over by State Bank of India; Establishment of Industrial Credit and Investment Corporation of India (ICICI) Life Insurance Company of India (LIC) was established Insertion of a new Chapter in RBI Act, 1934 to effectively supervise, control and regulate NBFCs Establishment of Industrial Development Bank of India(IDBI) Deposit insurance extended to co cooperative banks Year 33 1770 1850 35 1875 37 1918 39 31 Nationalisation of 14 largest banks commercial banks Nationalisation of general insurance companies Foreign Exchange Regulation Act (FERA) was promulgated which provided an opportunity to develop Indian equity market Establishment of Regional Rural Banks Second round of nationalisation of 6 commercial banks Establishment of National Bank for Agriculture and Rural Development (NABARD) First credit rating agency established in India Establishment of Small Industries Development Bank of India Report of the Committee on the Financial System, which provided the blueprint for first generation financial sector reforms. Introduction of prudential norms for income recognition and asset classification; SEBI became capital market regulator National Stock Exchange (NSE) was established as the first screen screen-based trading platform for traders. 47 1963 Introduction of Depositories Board for Financial Supervision, under RBI, established New guidelines for entry of new private sector banks announced Wholesale debt market operations started by NSE. 1993 1969

1973

1975 1980

1921

1982

11

1926

41

1990

13 15 17

1935 1947 1948

43

1991

19

1955

45

1992

21

1956

25

27 29

1964 1966

49

1994

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By P. K. Thakur

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Establishment of Institute for Development and Research in Banking Technology Depositories Act was passed which allowed for holding of securities in dematerialised form. Termination of automatic monetisation of Government deficit Statutory Liquidity Ratio (SLR) reduced to 25% (legal minimum) Insurance Regulation and Development Act passed Detailed guidelines on risk management in banks announced Guidelines issued regarding interest rate swaps and forward rate agreement New guidelines for categorisation and valuation of banks investment portfolio announced Liquidity Adjustment Facility introduced Foreign Exchange Management Act Credit Information Bureau of India Ltd was established Revised guidelines announced for entry of new private banks Clearing Corporation of India Limited became operational Central Listing Authority was constituted

1996

53

1997

55

1999

57

2000

59

2001

61

2002

63

2003

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By P. K. Thakur