was renamed as bank of bengal in january 1809 – mainly to fund general wellesley ’ s wars. this was followed by the establishment of the bank of madras in july 1843, as a joint stock company, through the reorganisation and amalgamation of four banks viz., madras bank, carnatic bank, bank of madras and the asiatic bank. this bank brought about major innovations in banking such as use of joint stock system, conferring of limited liability on shareholders, acceptance of deposits from the general public, etc. the bank of bombay, the last bank to be set up under the british raj pursuant to the charter of the then british east india company, was established in 1868, about a decade after the india ’ s first war of independence. the three presidency banks, as these were then known, were amalgamated in january 1921 to form the imperial bank of india, which acquired the three - fold role : of a commercial bank, of a banker ’ s bank and of a banker to the government. it is interesting to note here that merger of banks and consolidation in the banking system in india, is not as recent a phenomenon as is often thought to be, and dates back to at least 1843 – and the process, of course, still continues. with the formation of the reserve bank of india in 1935, some of the central banking functions of the imperial bank were taken over by the rbi and subsequently, the state bank of india, set up in july 1955, assumed the other functions of the imperial bank and became the successor to the imperial bank of india. evolution of legislative regulation of banking in india in the very early phase of commercial banking in india, the regulatory framework was somewhat diffused and the presidency banks were regulated and governed by their royal charter, the east india company and the government of india of that time. though the company law was introduced in india way back in 1850, it did not apply to the banking companies. the banking crisis of 1913, however, had revealed several weaknesses in the indian banking system, such as the low proportion of liquid assets of the banks and connected lending practices, resulting in large - scale bank failures. the recommendations of the indian central banking enquiry committee ( 1929 - 31 ), which looked into the issue of bank failures, paved the way for a legislation for banking regulation in the country. though the rbi, as part of its monetary management mandate, had, from the very beginning, been vested with the powers, under the rbi act, 1934, to regulate

an atm is not a fullfledged place of business for the banks. let me hasten to mention here the rbi has been liberal in authorising setting up of the atms and all the requests received by the rbi for establishing as many as 7443 atms were fully acceded to for the year 2006 - 07. as we know, the atms, in the format they are used today in india, already provide for deposit and withdrawal of cash, balance enquiry, account statements, etc. however, as seen in some of the advanced countries, the technology permits and can be leveraged to deploy the atms for delivering a much wider variety of banking services to the banks ’ customers and thus, have the potential of becoming a much fuller place of banking business. in any case, since the atms constitute an important channel for delivery of banking services, it is only logical that the network planning of the banks also captures the plan for setting up their atms and reflects it in their annual plan furnished to the rbi for authorisation. besides, in india ’ s wto commitments in regard to banking services, the market access limitations provide for specific licensing of the atms of the foreign banks, though the atm licences are not counted within the ceiling of 12 licences per year, as committed by india. in the emerging global context, therefore, it is only appropriate that the atms continue to be kept within the purview of regulatory authorisation policy. operations of foreign banks in india at present, there are 29 foreign banks operating in india with a network of 273 branches and 871 off - site atms. among some circles, a doubt is sometimes expressed as to whether the regulatory environment in india is liberal in regard to the functioning of the foreign banks and whether the regulatory approach towards foreign participation in the indian banking system is consistent with liberalized environment. undoubtedly, the facts indicate that regulatory regime followed by the reserve bank in respect of foreign banks is non - discriminatory, and is, in fact, very liberal by global standards. here are a few facts which bear out the contention ; • india issues a single class of banking licence to foreign banks and does not require them to graduate from a lower to a higher category of banking licence over a number of years, as is the practice followed in certain other jurisdictions. • this single class of licence places them virtually on the same footing as an indian bank and does not place any restrictions on the scope of their operations.