The first modern bank in Bengal was Bank of Hindustan, established in 1770 in Calcutta. It was an offshoot of trading company Messrs. Alexander and Co. and operated until 1832 when the trading company failed. The circulation of its notes was limited to Calcutta and its immediate environs.[1]
A number of Calcutta-based banks followed, none which survived beyond the middle of the 19th century: General Bank of Bengal and Bihar (1733–75); Bengal Bank (1784–91) (no relation to the later Bank of Bengal); General Bank, later General Bank of India (1786–91); The Commercial Bank (1819); The Calcutta Bank (1824); The Union Bank (1828); The Government Savings Bank (1833); and The Bank of Mirzapore (1835).[2][3]
The Bank of Calcutta, established in 1806, is the oldest still in existence in some form. It was renamed Bank of Bengal in 1809, was merged into the Imperial Bank of India in 1921, and became the State Bank of India in 1955.[4][5]
The first modern bank headquartered in Dhaka was Dacca Bank, established in 1846. It did a very limited business and did not issue banknotes. It was purchased by Bank of Bengal in 1862.[6][7] Bank of Bengal opened branches in Sirajganj and Chittagong in 1873, and in Chandpur in 1900. In 1947, upon the Partition of Bengal, it had six branches in East Bengal, in Dhaka, Chittagong, Chandpur, Mymensingh, Rangpur, and Narayanganj.[8]
Following the partition, branches of the registered banks started shifting to India or close down their operations in East Bengal. Resulting only 69 branches were left all over the East Pakistan in 1951.
In 1959, Eastern Mercantile Bank Limited was established and had 106 before independence. Consequently, in 1965 Eastern Banking Corporation was established and soon reached 60 just before the liberation war. These two banks were established with the initiation of some renowned Bengali businessmen for providing credit to the local entrepreneurs who had limited access to the credit in those days from other financial institutions of West Pakistan.