Where did the banking system originated?

write origin of modern banking system?
write the history of modern banking system?
Where did the banking system originated?
ORIGIN OR HISTORY OF MODERN BANKING SYSTEM In the opinion of some writers the word bank has been extracted from the Italian terms BANCUS or BANQUE which means BANCH. Modern Banking system originated and spread over the whole civilized world from Italy and England where people deposit their savings to the persons having the qualities of solvency, Honesty, and Safety. These trustees charged fee from depositors to earn livelihood. This practice turned into a widely accepted business and innovator trustees lend the deposited money and earned income from two ends, from depositors and from borrowers. In banking development the services of three groups cannot be ignored:

THE GOLDSMITHS: In ancient time some persons having the qualities of solvency, Honesty, Safety. Therefore people were trusted on them to keep money as deposits. The depositors would be given slips as the proof of their deposits; these slips were accepted by the people instead of money in transacting business due to high reputation of goldsmiths. These slips were the origin of the modern bank notes.

THE JEWISH MERCHANTS: A group of Jewish merchants migrated to England from Italy in the 14th century. These wealthy and well repute merchants began to lending the money for business purpose and charging interest. These merchants also financed foreign trade by issuing slips, through their agents. These slips were the origin of modern bills of exchange, draft and letter of credit.

THE PROFESSIONALS MONEY LENDERS: Many rich and wealthy persons used to lend money for the sake of earning interest. They also are used to taking deposits at a lower rate of interest and advancing loan at a higher rate. The gap of these rates was the profit of them. The similar practice of taking deposits at a lower rate of interest and advancing loan at a higher rate is the usual function of modern banking.

According to the modern banking, bank of Venus was the first bank, which was established in 1157.After that some other banks established which are given below.

• Bank of Barcelona in 1401

• Bank of Genoa (Italy) in 1407

• Bank of Amsterdam in 1609


During the era of King Charles II British Government established a bank named bank of England in 1694. It was grow very rapidly and this bank plays a vital role in the development of modern banking system in the world. In 1946 British govt. announced it as central bank of England. BANK HISTORY OF INDO-PAK: In Indian subcontinent bank of Bengal was the first bank of established in 1809. After that in madras 1840, Bombay 1863 other bank was established. In 1935 reserved bank of India established as Central bank. Habib Bank was established in 1941 and Muslim commercial bank was established in 1947. In July 1948 Pakistan established its central bank named “State bank of Pakistan”

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