State Bank of India logo

Indian Banks: The Story of State Bank of India

The State Bank of India (SBI) History

State Bank of India old logo
State Bank of India old logo
State Bank of India cheque
State Bank of India cheque

The State Bank of India was formed by the nationalization of the Imperial Bank of India in July 1955. This was the culmination of a IBI’s role in independent India — the debate on its bias towards European businesses and against indigenous entrepreneurs, and the slow pace of Indianization of its staff and management. The Rural Credit Survey Committee saw the proposed State Bank of India as a key part of its integrated system of rural credit. Consequently, the plan to nationalize the Imperial Bank became part of a wider effort to direct the funds of the banking system into certain neglected, but important, sectors of the economy such as agriculture, and spread banking facilities in rural areas.

Imperial Bank of India Emblem
Imperial Bank of India Emblem
Imperial Bank of India Cheque
Imperial Bank of India Cheque

The Imperial Bank was formed as a joint-stock bank in January 1921 by amalgamating the Presidency Banks of Bombay, Calcutta, and Madras. This amalgamation was a response both to the felt need for a bank which would hold government balances and use them to deepen the country’s financial structure, and to the threat which the Presidency Banks felt was likely to emanate from the inroads the London clearing banks were planning to make in India. Almost from its inception, the Imperial Bank had the status of a quasi-central bank, undertaking until the formation of the Reserve Bank of India in 1935, banking functions for the Government of India and other banking institutions and managing the rupee debt of the government.

SBI 200 Years Stamp
SBI 200 Years Stamp

Bank of Calcutta History:

The collapse of the Mughal empire, the uncertainity and political turmoil that followed, and the advent of the colonial power structure shook the existing ‘banking’ system in Indian. Indigenous bankers were eclipsed as Agency Houses took control of large finances. These agency houses enjoyed state patronage and some even established banks.

Bank of Bengal Building
Bank of Bengal Building

Among the early issuers, the General Bank of Bengal and Bahar (1773-75) was a state sponsored institution set up in participation with local expertise. Its notes enjoyed government patronage. Though successful and profitable, the bank was officially wound up and was short lived. The Bank of Hindostan (1770-1832) was set up by the agency house of Alexander and Company was particularly successful. It survived three panic runs on it. The Bank of Hindostan finally went under when its parent firm M/s Alexander and Co. failed in the commercial crisis of 1832. Official patronage and the acceptance of notes in the payment of revenue was a very important factor in determining the circulation of bank notes. Wide use of bank notes, however, came with the note issues of the semi-government Presidency Banks, notably the Bank of Bengal which was established in 1806 as the Bank of Calcutta with a capital of 50 lakh sicca rupees. These banks were established by Government Charters and had an intimate relationship with the Government. The charter granted to these banks accorded them the privilege of issuing notes for circulation within their circles.

Notes issued by the Bank of Bengal can broadly be categorised in 3 broad series viz: the ‘Unifaced’ Series, the ‘Commerce’ Series and the ‘Britannia’ Series. First came the unifaced notes.

Bank of Bengal Unifaced Currency
Bank of Bengal Unifaced Currency

The Bank of Bengal notes later introduced a vignette represented an allegorical female figure personifying ‘Commerce’ sitting by the quay. The notes were printed on both sides. On the obverse the name of the bank and the denominations were printed in three scripts, viz., Urdu, Bengali and Nagri.

Bank of Bengal Britannia Series Currency
Bank of Bengal Britannia Series Currency
Bank of Bengal Commerce Series Currency
Bank of Bengal Commerce Series Currency

On the reverse of such notes was printed a cartouche with ornamentation carrying the name of the Bank. Around the mid nineteenth century, the motif ‘Commerce’ was replaced by ‘Britannia’. The note had intricate patterns and multiple colours to deter forgeries.

Bank of Bombay History:

The second Presidency Bank was established in 1840 in Bombay, which had developed as major commercial centre. The Bank had a checkered history. The crisis resulting from the end of the speculative cotton boom led to the liquidation of Bank of Bombay in 1868. It was however reconstituted in the same year. Notes issued by the Bank of Bombay carried the vignettes of the Town Hall and others the statues of Mountstuart Elphinstone and John Malcolm.

Bank of Bombay currency
Bank of Bombay currency
Bank of Bombay Building
Bank of Bombay Building

Bank of Madras History:

The Bank of Madras’s history is officially traced to its formation in 1843 by the merger of Carnatic Bank (Fort St. George, 1788), the Madras Bank (1795) and the Asiatic Bank (1804). Banking in Madras can be traced to 1682 1 when Governor Gyfford and his council who established the Madras Bank — the first bank in India 2. 3 The notes of the Bank of Madras bore the vignette of Sir Thomas Munroe, Governor of Madras (1817-1827).

Bank of Madras currency
Bank of Madras currency
The Bank of Madras building
The Bank of Madras building

 Source1 Source2 Source3 Source4

The keyhole in the State Bank Group logo symbolises financial security but strangely it looks exactly like the Kankaria Lake in Ahmedabad.

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