Did India have PSU banks almost a century before State Bank of India came into being? This might be a confusing question to answer for some, who now know SBI as not only the largest bank but also as a veteran in the trade. Indeed, India’s largest bank by asset size — State Bank of India — has its roots in the pre-independence era and has the deepest reach in the remotest of the rural areas of the nation. But, the answer to the question whether there is a PSU bank almost a century older than SBI is: Yes.
The Kolkata-headquartered Allahabad Bank is as much as 90 years older than India’s largest financial conglomerate — Mumbai-based State Bank of India. Allahabad Bank was founded in Allahabad in the year 1865 while State Bank of India was incorporated in 1955.
State Bank of India has a distinguished history. The genesis of State Bank of India was laid way back in the early 19th century. In the year 1806, Bank of Calcutta was founded; it was later renamed to Bank of Bengal. Following this, Bank of Bombay and Bank of Madras were established in years 1840 and 1843 respectively. These three banks were known as the presidency banks and were incorporated as joint-stock companies.
What is a joint-stock company?
In a joint-stock company, equal portions of the entity (known as shares) can be bought and sold without affecting the functions of the running business.
Formation of State Bank of India
The three presidency banks — Bank of Bengal, Bank of Bombay and Bank of Madras — were integrated to a single large bank known as Imperial Bank of India in 1921. Later, in the year 1935 India’s central bank — Reserve Bank of India — was established under the Reserve Bank of India act. Imperial Bank of India was transformed into State Bank of India in 1955 — 20 years after the establishment of RBI.
Allahabad Bank was founded in the city of Allahabad by a group of Europeans in 1865 which was later shifted to Calcutta in the year 1923 on business considerations. In 1969, Allahabad Bank was nationalised along with other 13 banks. With the advent of globalisation, Allahabad Bank incorporated a merchant banking division — AllBank Finance Ltd.
State Bank of India vs Allahabad Bank
Both State Bank of India and Allahabad Bank are publicly listed on Bombay Stock Exchange and National Stock Exchange. Earlier last year, State Bank of India merged with itself five of its associate banks, namely State Bank of Patiala, State Bank of Mysore, State Bank of Bikaner and Jaipur, State Bank of Travancore and State Bank of Hyderabad. Allahabad Bank was formed on 24 April 2014 in Allahabad. Usha Ananthasubramanian is the present MD & CEO of Allahabad Bank whereas State Bank of India is being chaired by Rajnish Kumar.