Published Paper Details:

Banking and monetisation in India have a long history of evolution. The study argues that the evolution of banking systems in colonial India was shaped by intricate interactions between colonial and indigenous economic interests. Specifically, the article examines the colonial economic considerations that were decisive in reshaping indigenous banking practices. The introduction of the European model of limited liability joint-stock banks in the second half of the eighteenth century marked the beginning of modern banking in India. The British-designed institutions primarily served the growing demand for credit in international trade. Over time, British colonial rule, along with Indian responses to imperial financial policies, led to the emergence of a highly sophisticated banking and monetary system with sufficient infrastructure to promote commerce and industrial agriculture. However, the post-independence interventions made by the Government of India revealed that the colonial banking policies had resulted in an uneven growth of banking facilities. In 1947, the majority of remote villages in India lacked access to modern banking services, highlighting the exclusionary nature of colonial financial institutions. This issue of unequal development prompted significant banking reforms, beginning with the establishment of the State Bank of India. By reviewing the evolution of modern banking institutions in India from the mid-eighteenth century up to 1947, this article shows how colonial banking policies, driven by the interests of the big business and commercialised agricultural activities created inequality in access to banking services. These contexts eventually necessitated post-independence policies aimed at democratising banking sector for financial inclusion, culminating in the nationalisation of banks in the 1970s.