Evolution of Commercial Banking System

Evolution of Commercial Banking System- The word commercial bank leads to a financial institution that takes deposits, makes various loans, offers to check account services, and offers basic financial outcomes like certificates of deposit (CDs) and savings accounts to individuals and small businesses. Italy is the birthplace of modern-day banking. After the commercial activities shifted to the Mediterranean, Adanic, and European cities, the Italian cities fell behind as new banking techniques spread to the new regions. Sweden introduced paper money that was accepted as legal tender by the state for tax payments. The concept of loans emerged as Britain started using paper money more than bullion. The goldsmiths storing bullions for safekeeping started lending such coins and the people depositing coins were issued receipts. These receipts became a banknote that is currency notes, issued by and repayable on demand by the banker.

Banking in Ancient India

In ancient India, there is evidence of loans from the Vedic period (beginning 1750 BC). Later during the Maurya dynasty (321 to 185 BC), an instrument called adesha was in use, which was an order on a banker desiring him to pay the money of the note to a third person, which corresponds to the definition of a bill of exchange as we understand it today. During the Buddhist period, there was considerable use of these instruments. Merchants in large towns gave letters of credit to one another.

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