Evolution of the State bank of India

The origins of the State Bank of India can be traced back two hundred years to the establishment of the Bank of Calcutta. The keen interest shown by the directors of the bank in maintaining records found an echo in 1975 when R.K. Talwar, a former chairman of the State Bank, commissioned an account of the bank's evolution from its earliest days.

Written by noted economist Amiya Kumar Bagchi, The Roots 1806–1876 , relies not only on those records but diverse other sources to provide a fascinating look into the progress of banking in the early decades of the nineteenth century.

Banking in those days was a far cry from what it is today—an unbiased, uniform system that has led to increased purchasing power across classes. At the time, even though the rupee was the unifying currency, there also existed a confusing array of coinage whose value could vary by the region. Besides the cowrie—sea shells brought in from the Maldives—were the sicca, the Arcot rupee, notes issued by various banks and copper, silver and gold coins that the British tried to introduce as a standard coinage. Only the wealthy Indians and the Europeans had any use for bank notes—for the greater part of the population even the lowly copper coin had a purchasing power beyond their day-to-day needs. Rates of interest, while regulated for the banks to a maximum of 12 per cent, were exorbitant for the peasants, labourers and artisans with 50 per cent being fairly standard.

The organizational set-up had its own share of anomalies, with salaries far lower for Indians than Europeans. The highest an Indian could aspire to was the position of khazanchee, a thankless job whose responsibility was equal to that of the secretary and treasurer, but at a salary that was one-seventh. Even so, the job would attract applications from some of Calcutta's wealthiest and best educated, as the British had denied all superior government jobs to Indians.

The Bank of Bengal was followed by the Banks of Bombay and Madras and these three comprised the presidency banks that in 1921 would become the Imperial Bank, the immediate precursor to the State Bank of India. This volume presents a panoramic view of their functioning till 1876, and through them the changes that were occurring in the trading environment and the economy. The Roots 1806–1876 is an integrated history of the development of banking, commerce, finance and industry in India, and of the people, from Ram Comul Sen, the dedicated khazanchee of the Bank of Bengal, to his petty-minded boss, George Udny, who guided its course.