British System

1. Goldsmith Banking Era (17th Century)
   • Goldsmiths initially acted as custodians of gold.
   • Issued receipts for deposited gold, which later evolved into promissory notes or early forms of banknotes.
   • Laid the foundation for the modern fractional reserve system.
   • Technical Term: Promissory Note, Fractional Reserve Banking.
2. Bank of England (1694)
   • Founded to finance war expenditures and government debt.
   • Played a dual role as a commercial bank and a regulator of monetary policy.
   • Introduced banknotes as legal tender.
   • Technical Term: Lender of Last Resort, Central Bank.
3. Joint-Stock Banks (19th Century)
   • Limited liability introduced, attracting private investors.
   • Expansion of credit and financing to industrial sectors during the Industrial Revolution.
   • Prominent banks included Barclays, Lloyds, and Midland Bank.
   • Technical Term: Limited Liability, Corporate Banking.
4. Savings and Cooperative Banks (19th-20th Century)
   • Developed to encourage savings and provide credit to specific sectors, including agriculture.
   • Led to the creation of Post Office Savings Banks in rural areas.
   • Technical Term: Financial Inclusion, Thrift Institutions.

Indian System

1. Indigenous Banking (Pre-British Era)
   • Traditional moneylenders (Seths, Shroffs, Chettis) provided loans and managed wealth.
   • Focused on trade financing, bills of exchange, and usury practices.
   • Technical Term: Hundi System, Informal Credit Market.
2. Presidency Banks (1806-1843)
   • Bank of Bengal (1806): First modern bank established by the British East India Company.
   • Bank of Bombay (1840) and Bank of Madras (1843) followed.
   • These banks provided loans primarily to British merchants and industries.
   • Technical Term: Chartered Banks, Colonial Banking.
3. Imperial Bank of India (1921)
   • Formed by merging the three Presidency Banks.
   • Functioned as a quasi-central bank before the establishment of the Reserve Bank of India (1935).
   • Later converted to the State Bank of India (SBI) in 1955.
   • Technical Term: Quasi-Central Bank, Bank Consolidation.
4. Nationalization of Banks (1969 & 1980)
   • 14 major banks nationalized in 1969, followed by 6 more in 1980.
   • Aimed at channeling banking services towards agriculture, rural development, and poverty alleviation.
   • Creation of Regional Rural Banks (RRBs) in 1975.
   • Technical Term: Social Control, Directed Credit Programs.
5. Reforms and Liberalization (1990s)
   • Post-1991 reforms allowed private and foreign banks like HDFC, ICICI, and HSBC.
   • Introduction of Basel Norms for risk management and capital adequacy.
   • Integration of technology (ATMs, mobile banking).
   • Technical Term: Liberalization, Basel Norms, Digital Banking.
6. Modern Banking Innovations (2000s-Present)
   • Growth of FinTech companies like Paytm and PhonePe.
   • Initiatives like Pradhan Mantri Jan Dhan Yojana (PMJDY) for financial inclusion.
   • Emergence of Neo-Banks offering branchless banking solutions.
   • Technical Term: Neo-Banking, Financial Technology (FinTech).

Conclusion

The evolution of banking in both systems showcases a journey from informal credit mechanisms to advanced digital banking ecosystems. The focus has shifted from elite-centric banking to inclusive, technology-driven financial systems, meeting the needs of modern economies.