EnglishEssay on Indian Banking System

Essay on Indian Banking System

Indian Banking System Essay for Students and Children

Essay on Indian Banking System: Banks accept deposits and lend through loans or capital markets. Indian banks are categorized. Each group’s activities have pros and cons. In this Essay on Indian Banking System, we will talk about banking in India’s history, the feature of the Indian banking system, and the importance of the Indian banking system. You can also find more Essay Writing articles about events, people, sports, technology, and many other things.

Indian banking began in the mid-18th century. The first banks were the Bank of Hindustan, founded in 1770 and liquidated in 1829–32, and the General Bank of India, founded in 1786 and failed in 1791.

The State Bank of India is India’s largest and oldest bank (SBI). The Bank of Calcutta was founded in mid-June 1806. It became the Bank of Bengal in 1809. The Bank of Bombay in 1840 and the Bank of Madras in 1843 were the other presidency-founded banks.

Essay on Indian Banking System

500 Words+ Essay on Indian Banking System in English

History of Banking System

Ancient India

Usury, or Austin, is mentioned in the Vedas. The Sutras (700–100 BCE) and Jatakas (600–400 BCE) mention usury. Vasishtha forbade Brahmin and Kshatriya varnas from usury in his texts. Usury was accepted by the 2nd century CE. Usury was acceptable in the Manusmriti for making money. Money lending above a certain rate was a grave sin.

Medieval Period

Dastawez (Urdu/Hindi) loan deeds continued into the Mughal era. Loan deeds have two types. Dastawez-e-indultalab was payable on demand and dastawez-e-miadi after a set time. Royal treasuries also used barrettes and payment directives.

Colonial era

In 1829, British merchants founded the Union Bank of Calcutta as a private joint stock association and later a partnership. The owners of Commercial Bank and Calcutta Bank agreed to form Union Bank to replace them. It opened a Singapore agency in 1840 and closed its Mirzapore one the year before. In 1840, the Bank disclosed its accountant’s fraud. Union Bank, founded in 1845, failed in 1848 after using depositor funds to pay dividends.

Types of Banks

There are different kinds of banks. Some help people with their farming problems, while others help us with our everyday problems. I’ll explain what they are below-

  • Central Bank
  • Commercial Banks
  • Retail Banks
  • Private Bank
  • Online Bank
  • Saving Bank
  • Regional Rural Bank

The banking industry is one of the most important parts of the financial sector, and it is very important to the way the economy works. For a country’s economy to grow, its trade, industry, and farm funding needs must be taken care of with more dedication and responsibility.

So, a country’s progress is directly tied to how well its banking system works. In the economy we have now, banks should be seen more as leaders of growth than as money dealers. They are very important for getting people to save money and lending money to many parts of the economy.

The features of the Indian banking system:


The main thing about a bank is that it deals with all financial transactions. For example, you can put your money in a bank account to keep it safe, and the money you save in the account will be of interest to you.

Provides Loans

Banks make more money by lending money for a wide range of products. The bank gets the extra money by lending money to the person who qualifies at rates that have already been set.

Banks now offer loans for many different things, like going to school, buying a car, buying a house, getting a personal loan, and so on.

Payments and withdrawals

Customers can get their money quickly and easily when they use a bank’s many payment and withdrawal services. Customers can get cash out of banks using checks, draughts, and ATMs set up by banks in different parts of the city.

Internet services

Banks now offer internet services, which is another thing they do. As the internet has grown and been used more in banking, it has become even easier for customers to do a variety of transactions. Banks offer online services through the apps they make. You don’t need cash to pay your bills, buy food, or go shopping.


Banking isn’t just about giving banking services to customers. All banks have subsidiary businesses that help them make more money. Their only job is to give customers the best service and highest interest rates possible so that more people will bank with them. To make money, money has to be moved from one person to another.

How important the Indian banking system is

  • If a country doesn’t get enough capital, it’s hard for its economy to grow. At this time, commercial banks are telling people to save their money and use it for good things.
  • Credit creation increases output, which in turn increases economic growth and creates a lot of job opportunities.
  • Commercial banks help India develop in a balanced way by giving backward areas the money and financial infrastructure they need.
  • Commercial banks help to grow the primary sector by lending money to farmers when they need it.
  • They give consumers loans in advance to buy things like homes, consumer goods, and furniture, among other things, and they encourage people to try to improve their standard of living.
  • The banking sector is a big part of the Indian economy because commercial banks help the government reach each goal of the country’s planned economic growth.
  • Commercial banks provide the money and infrastructure needed for trade both inside and outside the country.


Indian banking system essay discusses its history, structure, and functions. The essay begins with a brief history of Indian banking and its evolution. It then discusses the Indian banking system’s features, importance, and types. The essay concludes that the Indian banking system drives economic growth and development.

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