On June 2, 1806, a clutch of European merchants -- most of whom were Scottish, the East India Company's Bengal government and 27 wealthy Indians launched the Bank of Calcutta.
It had a share capital of Rs 50 lakh (Rs 5 million), and each share was priced at a princely Rs 10,000.
It was one of first western style banks in India which took deposits and gave loans -- the deposit taking side of banking was till then alien to indigenous banks. Banking in those days was restricted to caste-based lending -- a brahmin got a loan at 15 per cent while a shudra got it at 60 per cent.
The Bank of Calcutta was set up to alleviate the financial stress of the East India Company's government, which had run into severe trouble with wars raging against the Marathas, the French and the ruler of Mysore, Tipu Sultan.
It was later rechristened as the Bank of Bengal under a charter of the British crown. Governed by mostly British directors and employing mostly whites and catering to largely white customers, it was almost a foreign bank excepting for the fact that it was incorporated in India.
Maharaja Sukhomoy Roy Chaudhry was the lone Indian director of the bank -- but that was way back in 1809.
There were a few wealthy Indian customers as well. There was prince Dwarkanath, poet laureate Rabindranath Tagore's grandfather.
A rich local merchant, he had interests in banking, insurance and coal mines. Records show he took a loan of Rs 60,000 in 1817. The East India Company also created the Bank of Bombay in the Bombay Presidency in 1840 and the Bank of Madras in the Madras Presidency in 1843.
These presidency banks were always sticklers for rules. Said Willian Bentinck, the then governor general of India, "This was the bank to do business with which would not violate its rules in the smallest particular for the govenor general himself." His cheque had just been returned by one of the presidency banks because his account fell four annas short.
The Bank of Bengal took its first deposit in 1884 and gave a return of 4 per cent per annum and its first savings deposit in 1902. On completion of the first 100 years, the Bank of Bengal's deposits were over Rs 24 crore (Rs 240 million) and advances over Rs 16 crore (Rs 160 million).
In 1921 with the merger of the three presidency banks into the Imperial Bank of India the deposits grew to over Rs 92 crore (Rs 920 million)and advances to over Rs 49 crore (Rs 490 million).
In 1955 when the Imperial Bank of India was nationalised to become the State Bank of India, the deposits grew to over Rs 210 crore (Rs 2.10 billion) and advances to over Rs 117 crore (Rs 1.17 billion).
On completion of 200 years, State Bank of India's deposits have growth over 14,000 times from 1905 levels to Rs 3,56,643 crore (Rs 3,566.43 billion) and advances by over 13,000 times to Rs 2,09,742 crore (Rs 2,097.42 billion).
So, how did the Imperial Bank become the State Bank of India? After Independence a debate started between the government and the Reserve Bank of India to nationalise the Imperial Bank of India.
Finally, in 1955, an Act of Parliament nationalised it, creating the State Bank of India. The nationalisation wrested majority control with the Reserve Bank of India.
At that juncture, SBI had 219 branches and 14,682 employees, today it has about 14,000 branches and a staff strength of 2 lakh (including its seven associate banks).
When the bank was nationalised, several European shareholders exited the new entity, and the RBI's stake soared to 97.1 per cent. One of the Indian shareholders who decided to maintain his stake in State Bank of India was India's foremost industrialist at the time, J R D Tata.
Two centuries down the road, the bank, which was meant to fund the wars of the Bengal government and enrich the European traders, caters to almost every Indian household.
