Presidency Bank:
The East India company laid the
foundation for modern banking in the first half of the 19th century
with the establishment of the following three banks:-
1.
Bank
of Bengal in 1806.
2.
Bank
of Bombay in 1840.
3.
Bank
of Madras in 1843.
These banks came to be known as the
‘Presidency Banks’. Besides ordinary banking function, these banks also functioned
as banker to the government. They functioned as independent units. The
presidency Bank of India got amalgamated into the Imperial Bank of India in
1921.
Imperial
Bank of India:
The Imperial
Bank of India came into existence on January 27, 1921 by the Imperial Bank of
India Act of 1920. This Bank was formed through the reorganization and amalgamation of the three Presidency Banks of British India namely the Bank of Bengal (1806), the Bank of Bombay (1840), and the Bank of Madras (1843) into a single banking entity. The Imperial Bank was 80% privately owned while the rest were owned by the state. At that point of time it performed all the normal
banking functions similar to that of a commercial bank . In India until 1935, the Imperial Bank of India used to perform some of the functions of a central bank which it perform because of the absence of central bank in India till date.
Image source: en.wikipedia.org
Some of the functions that Imperial Bank performed were- holding government funds and manage the public debt. But the Imperial Bank didn't get
authorization to issue currency notes in India. Due to a concerted demand
for the Nationalization of the Imperial Bank of India, after Independence, the Bank was brought under public ownership from 1 July 1955 and was converted
into the state Bank of India. Thus it is evident that The Reserve Bank of India, which is the central
bank of India, got the controlling power of the Imperial Bank of
India in 1955. After that the Imperial Bank was renamed as State Bank of India on 30 April 1955 and got the legal recognition of such transformation through an Act of the Parliament of India, which came into force from
1 July 1955. It was done with the aim of facilitating the extension of banking in rural and semi-rural areas.