BANKING SECTOR REFORMS, EVOLUTION, PHASES, -A STUDY

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Modern banking in India began during the colonial period with the establishment of agency houses and presidency banks such as the Bank of Bengal (1806), Bank of Bombay (1840), and Bank of Madras (1843). These institutions were later merged in 1921 to form the Imperial Bank of India, which functioned both as a commercial bank and a quasi-central bank. After Independence, concerns emerged that the banking system was largely serving the interests of urban and industrial elites, while neglecting agriculture and rural sectors. To address this imbalance, the Imperial Bank was nationalised in 1955 and converted into the State Bank of India, marking the beginning of state intervention in banking. phases: First Phase (1969): In 1969, the Government of India nationalised 14 major commercial banks. These were banks with deposits above ₹50 crore. Second Phase (1980): In 1980, the government nationalised 6 more banks, expanding state control further. The Banking Laws (Amendment) Act, 2025 was enacted to update outdated provisions in banking laws, strengthen governance in public sector banks, and improve depositor convenience in a modern financial system. Key reforms include:

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