Balaji Vishwanath divided the Maratha territories among chiefs who were given the task of collecting revenue. The chiefs were allowed to keep a part of the collection to meet their expenses. This made them powerful and ambitious. Baji Rao I succeeded his father, Balaji Vishwanath, in 1720.
Through a treaty, he made peace between the Marathas of Satara and those of Kolhapur. The Maratha kingdom expanded under Baji Rao I. However, this expansion was mainly carried out by the personal armies of the Maratha chiefs and not by the peshwa’s troops. By 1737, Maratha influence extended over Malwa, Gujarat, Bundelkhand and the outskirts of Delhi. Some of the chiefs like Sindhia in Gwalior, Bhonsle in Nagpur, Gaekwad in Baroda and Holkar in Indore became almost independent of the peshwa’s control. Baji Rao I captured Salsette and Bassein on the Konkan Coast from the Portuguese. He, however, paid little attention to the administration of the newly acquired territories. Balaji Baji Rao (Nana Saheb) succeeded his father, Baji Rao I, in 1740.
After Shahu’s death in 1749, the peshwa shifted the Maratha capital to Pune, while Shahu’s successor remained at Satara. Under Balaji Baji Rao the Marathas established their influence over the Carnatic. They won vast territories from the Nizam of Hyderabad and from the rulers of Mysore. They also brought Malwa and large parts of Bundelkhand under their direct control. They angered the Jats, the Rohillas of Rohilkhand and the Nawab of Awadh by raiding their territories and forcing them to pay tribute. In 1751, the Marathas forced the Nawab of Bengal to cede Orissa and pay tribute. In 1757, the Marathas helped the Mughal Emperor by removing the agent posted in Delhi by Ahmad Shah Abdali. In 1758, they took Sirhind and Lahore from the Afghans.
All this made a war between the Marathas and the Afghans inevitable.