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Time of India
5 days ago
- Business
- Time of India
UPI and beyond: The great Indian banking leap
India's banking and finance journey has been a steady transformation from a quasi-central banking setup under colonial rule to one of the most digitised and inclusive systems in the world. It is a story shaped by landmark institutional changes, decisive policy shifts and rapid technological adoption, with the Reserve Bank of India ( RBI ) and the Ministry of Finance playing central roles in guiding its evolution. Imperial Bank to the RBI The foundations were laid in the early 19th century with the setting up of Presidency Banks: the Bank of Calcutta in 1806, the Bank of Bombay in 1840 and the Bank of Madras in 1843. Finance Value and Valuation Masterclass Batch-1 By CA Himanshu Jain View Program Finance Value and Valuation Masterclass - Batch 2 By CA Himanshu Jain View Program Finance Value and Valuation Masterclass - Batch 3 By CA Himanshu Jain View Program Artificial Intelligence AI For Business Professionals By Vaibhav Sisinity View Program Finance Value and Valuation Masterclass - Batch 4 By CA Himanshu Jain View Program Artificial Intelligence AI For Business Professionals Batch 2 By Ansh Mehra View Program These three institutions merged in 1921 to form the Imperial Bank of India, which for years functioned as a quasi-central bank until the RBI's establishment in 1935. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like The Top 25 Most Beautiful Women In The World Articles Vally Undo After Independence, the need for a strong, state-backed institution to extend credit to rural India became pressing. Acting on the recommendations of the All India Rural Credit Survey Committee, the government passed the State Bank of India Act in 1955, transforming the Imperial Bank into the State Bank of India (SBI) with a clear mandate to serve the broader economy. Bank nationalisation The nationalisation of banks marked another turning point. Live Events In 1969, Prime Minister Indira Gandhi brought 14 major private commercial banks under government ownership, aiming to align banking with national development goals. This move channelled credit towards agriculture, small industries and rural infrastructure. A second wave of nationalisation followed in 1980, adding six more banks to the public sector and consolidating state control over the financial system. Alongside these changes, the cooperative banking movement, rooted in the 1904 Cooperative Societies Act, expanded access to credit in rural and semi-urban areas, operating on principles of mutual assistance and democratic governance. 1991 reforms The reforms of 1991 fundamentally reshaped the sector. Triggered by a balance of payments crisis, the government implemented sweeping liberalisation measures based on the Narasimham Committee's recommendations. Interest rates were freed from state control, statutory liquidity and reserve requirements were eased, prudential norms were brought in line with global standards, and private sector participation was encouraged through new bank licences. This ushered in a new generation of private banks that embraced technology, customer service and competitive practices, compelling public sector banks to modernise in response. As the century turned, technology began to redefine how Indians interacted with money. ATMs, cards and internet banking The first ATM appeared in 1987, credit card usage slowly expanded with the arrival of global players like Visa and Mastercard, and internet banking gave customers the ability to manage accounts remotely. The government's push for financial inclusion through the Pradhan Mantri Jan Dhan Yojana in 2014 brought millions of unbanked households into the formal system, creating a foundation for the next wave of digital transformation. UPI and the digital payments revolution That wave arrived with the Unified Payments Interface in 2016, launched by the National Payments Corporation of India. By enabling instant, real-time transfers between individuals and merchants using simple IDs or QR codes, UPI revolutionised digital payments and made India a world leader in real-time transaction volumes. Digital wallets, mobile banking and QR payments quickly became everyday tools, changing both consumer behaviour and the way businesses operate. Meanwhile, the financial ecosystem expanded beyond traditional banks. Non-Banking Financial Companies, such as Bajaj Finserv and Muthoot Finance , began serving small businesses and under-banked populations, while fintech firms like Paytm and PhonePe reimagined payments, lending, insurance and wealth management. The Account Aggregator framework enabled secure, consent-based sharing of financial data, paving the way for personalised services, while credit bureaus such as CIBIL standardised credit assessments and promoted responsible lending. As of now, the sector stands on the brink of its next transformation: the RBI's Central Bank Digital Currency, known as the digital rupee or e₹. Designed as a sovereign-backed legal tender in digital form, it offers the convenience of instant settlement and zero transaction costs, functioning like physical cash but stored in a secure digital wallet. Pilot programmes are already testing its use in both wholesale and retail contexts, signalling the start of a new era in India's financial story, one where the boundaries between traditional banking, fintech and digital currency may blur entirely.
Mint
05-07-2025
- Business
- Mint
The original unicorn: How Annamalai Chettiar built India's first financial powerhouse
Next Story Sundeep Khanna The man who co-founded Indian Bank and became governor of Imperial Bank (now State Bank of India), cracked the code of cross-border finance long before most Indians had even heard of it. Annamalai Chettiar. Illustration: Mint Gift this article Long before the first unicorns and decacorns appeared in India, there lived an entrepreneur who had an innate understanding of scale and an uncanny ability to leverage diaspora networks. Long before the first unicorns and decacorns appeared in India, there lived an entrepreneur who had an innate understanding of scale and an uncanny ability to leverage diaspora networks. Had Annamalai Chettiar (Satappa Ramanatha Muthiah Annamalai Chettiar) been alive, he would have been called upon to deliver TED talks on banking without borders. Instead, this pioneering businessman from Tamil Nadu, who wrote the playbook for colonial banking in India, remains largely forgotten outside academic circles, though the posh Raja Annamalai Puram neighbourhood in Chennai is named in his honour. Also Read | Novelis and after: How Hindalco cracked the foreign buyout code At a time when Indian companies are going global with unabashed ambition, his century-old blueprint for international expansion reads like a modern startup story. The man who co-founded Indian Bank with his brother Ramaswami Chettiar, and became governor of Imperial Bank (now State Bank of India), cracked the code of cross-border finance long before most Indians had even heard of it. Born into the influential Nattukottai Nagarathars community in September 1881, he inherited a business ecosystem of south and southeast Asian venture capital. Steeped in the Chettiar model of leveraging community ties, his unique ability lay in institutionalising these sprawling yet vetted networks, in the process connecting diasporas across geographies. This allowed him to access money transfers more quickly, through what we would call correspondent banking. The modern equivalent would be a Paypal and Western Union rolled into one but with cultural connectivity and driven purely by relationships. Over time, Annamalai Chettiar became a huge landlord, though his actual net worth is shrouded in mystery. Institution builder Perhaps his most underrated achievement was his role as an institution builder, which stemmed from his belief that wealth creation came with social responsibilities and investment in human capital. Indeed, long before corporate social responsibility (CSR) became a byword, his approach to philanthropy centered on long term investment rather than on immediate relief. In 1920 he set up the Sri Meenakshi College in Chidambaram in the firm belief that education was the primary need of the country. Later this became part of the well known Annamalai University, his master passion that today offers education to millions. A patron of the arts, he also funded the Tamil Isai Sangam for music. This faith in the utility of non-business enterprises was strengthened after the Great Depression of 1929, which served as a reality check that tested everything Annamalai had built, and brought new thinking to the Chettiar fold. As the economic crisis that originated in the US swept through Asian economies, Burmese cultivators defaulted on their loans. This placed the Chettiar banking network, which had flourished in Ceylon, Burma and Southeast Asia, under siege, as crop prices tanked. A reliable source of profit now became a nightmare of foreclosures and losses. The colonial governments instituted banking enquiries in the spate of these collapses. For Annamalai, this was a moment of reckoning, one that forced him to look at institution-building instead of pure commercial expansion. That's where the focus on charity and education took shape. This didn't dim his obsession with palatial architecture, which led him to build multiple residences including the grand Chettinad Palace in Chennai. He also built the Kanadukathan palace, which used the best materials imported from all over, and took seven years to complete. Tryst with politics As was customary for successful businessmen of that era, Annamalai entered politics. In 1920 he stood for election to the council of state, the upper house of the Imperial Legislative Council of India, and held his seat for three consecutive terms. While he received a knighthood and the distinction of Rajah of Chettinad from the British, domestic honors took longer. It was only in 1980, 32 years after he had passed away, that the government of India released a stamp in his honour. His son, Sir Muthiah Annamalai Muthiah Chettiar, became the first mayor of Madras. Continuing the legacy, his grandson Palaniappan Chidambaram became the finance minister of the county. Also Read | How big brands fooled consumers with plastic The Annamalai Chettiar story matters in 2025 because it challenges fundamental assumptions about Indian business history and capabilities. While we often trace the story of Indian entrepreneurship to the post-liberalisation era, Annamalai's example shows how entrepreneurs were building international businesses with remarkable sophistication long before 1991. His approach, combining cultural understanding with institutional innovation while leveraging community networks and aiming for global scale, reads like a modern business school case study on emerging market strategy. For today's entrepreneurs, his story offers more than historical inspiration; it gives us perspective. Annamalai Chettiar built his empire without venture capital and government support, on a clear understanding of what we now call network effects. In India's economic history, he represents a critical but under-celebrated archetype, the quiet capitalist philanthropist whose influence rests not on spectacle but on building institutions. Topics You May Be Interested In Catch all the Business News , Corporate news , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
