Colonial Legacy and the Evolution of Modern Banking Institutions in India: A Historical and Analytical Perspective

Abstract

The foundation of India’s modern banking system was laid during British colonial rule. Introduced primarily to facilitate imperial trade, revenue collection, and financial control, colonial banking institutions neglected indigenous financial needs and shaped an unequal financial structure that continued even after independence. This paper explores how the British colonial administration institutionalized Western banking models in India, how these systems marginalized native banking, and how post-independence reforms attempted to “decolonize” the financial system. Using statistical data from the Reserve Bank of India, historical archives, and scholarly sources, the paper highlights the structural continuities and policy responses that define India’s banking evolution.