Formation of State Bank of India (SBI)
The State Bank of India (SBI Bank) is the biggest bank in India currently. It is a public sector bank, multinational in nature and is a financial services company. With a market share of 23% when it comes to assets, it also has a one-fourth share of the deposits and total loans market.
The roots of State Bank of India (SBI Bank) lie in the first decade of the 19th century when the Bank of Calcutta later renamed the Bank of Bengal, was established on 2 June 1806. The Bank of Bengal was one of three Presidency banks, the other two being the Bank of Bombay (incorporated on 15 April 1840) and the Bank of Madras (incorporated on 1 July 1843). All three Presidency banks were incorporated as joint stock companies and were the result of royal charters. These three banks received the exclusive right to issue paper currency till 1861 when, with the Paper Currency Act, the right was taken over by the Government of India. The Presidency banks amalgamated on 27 January 1921, and the re-organised banking entity took as its name Imperial Bank of India. The Imperial Bank of India remained a joint-stock company but without Government participation.
Formation of State Bank of India (SBI)
The Imperial Bank was formed as a joint-stock bank on 27 January 1921 by amalgamating the Presidency Banks of Bombay, Calcutta, and Madras. The Imperial Bank had the status of a quasi-central bank, and was carrying the responsibility of handling banking functions for the Government of British India and other banking institutions and managing the rupee debt of the government, undertaking until the formation of the Reserve Bank of India in 1935. After formation of Reserve Bank of India, Imperial bank was doing banking functions for public only.
Read More : History of Reserve Bank of India
After independence, a committee was formed by Government of India named as “The All India Rural Credit Survey Committee, commissioned in August 1951 headed by A.D. Gorwala. Recommendation of Gorwala committee, Government of India and Reserve Bank of India took decision of nationalisation of imperial bank. On provisions of State Bank of India Act 1955, The Government of India took control of the Imperial Bank of India in 1955 with reserve bank of India taking a 60% stake. On 1 July 1955, the Imperial Bank of India was nationalized and renamed as the State Bank of India.
In Year 1959, the government passed the State Bank of India (Subsidiary Banks) Act. That was called attachment Act 1959. Under this act eight banks were associated as subsidiary banks of SBI. This was the time of the First Five Year Plan, which prioritised the development of rural India. Aim of SBI and its associate bank was to expand its rural outreach. As per history of merger of banks in India, in year 1963 SBI merged its two associate banks, State Bank of Jaipur (est. 1943) and State Bank of Bikaner (est.1944), and renamed as State Bank of Bikaner and Jaipur (SBBJ).
List of Associate Banks of SBI and Merger year of associate banks in SBI.
Associate Bank | Year of merger in SBI |
State Bank of Saurashtra | On 13 August 2008 merged with SBI |
State Bank of Indore | On 26 August 2010 merged with SBI |
State Bank of Bikaner and Jaipur | On 1 April 2017 merged with SBI |
State Bank of Hyderabad | On 1 April 2017 merged with SBI |
State Bank of Mysore | On 1 April 2017 merged with SBI |
State Bank of Patiala | On 1 April 2017 merged with SBI |
State Bank of Travancore | On 1 April 2017 merged with SBI |
Bhartiya Mahila Bank | On 1 April 2017 merged with SBI |
Read More : History of Reserve Bank of India
Read More : History of Banking System in India
There are seven non-banking subsidiaries of SBI viz. SBI capital markets ltd, SBI factors and commercial services pvt ltd, SBI funds management pvt ltd, SBI cards and payment services pvt. Ltd, SBI DFHI ltd, SBI Life insurance company limited and SBI General Insurance.
Bharatiya Mahila Bank (BMB) was established in 2013 as a public sector bank with headquarters in Delhi and 100% government ownership. BMB and five of SBI’s Associated Banks, namely State Bank of Bikaner and Jaipur (SBBJ), State Bank of Hyderabad (SBH), State Bank of Mysore (SBM), State Bank of Patiala (SBP), and State Bank of Travancore (SBT), amalgamated into SBI on April 1, 2017.
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