Global Capital, Local Constraints: The Evolution of Foreign Banks in India
Foreign banks have had a long, magnetic, and often turbulent relationship with India. Their presence has alternated between phases of intense engagement and abrupt retreat, shaped by episodes of global financial stress, domestic regulatory change, and shifting strategic priorities in their home markets. Yet, despite this on‑again, off‑again pattern, foreign banks have played a central role in India’s financial evolution, bringing capital, technology, innovation, and global connectivity that have influenced the country’s banking structure for more than a century and a half. The story begins in the late eighteenth century, when India’s first bank, the Bank of Hindostan, was established in 1770 by Alexander and Company, a Scottish agency house operating under the commercial framework of the English East India Company. In the early period of British rule, most banking institutions were created by the Company, its affiliates, or private agency houses and merchants, and their activities were...