Nationalization of Banks
The year 1949 marked the beginning of a new era in the economic history of India. It was the beginning of a period of remedy and a period of seed time. As soon as India became independent the government embarked upon a programme of removing the ills of the past and sowing the seed of economic independence, economic growth and economic prosperity.
Objectives of Nationalization of Banks
The nationalization of commercial banks took place with an aim to achieve following major objectives.
- Social Welfare : It was the need of the hour to direct the funds for the needy and required sectors of the indian economy. Sector such as agriculture, small and village industries were in need of funds for their expansion and further economic development.
- Controlling Private Monopolies : Prior to nationalisation many banks were controlled by private business houses and corporate families. It was necessary to check these monopolies in order to ensure a smooth supply of credit to socially desirable sections.
- Expansion of Banking : In a large country like India the numbers of banks existing those days were certainly inadequate. It was necessary to spread banking across the country. It could be done through expanding banking network (by opening new bank branches) in the un-banked areas.
- Reducing Regional Imbalance : In a country like India where we have a urban-rural divide; it was necessary for banks to go in the rural areas where the banking facilities were not available. In order to reduce this regional imbalance nationalisation was justified:
- Priority Sector Lending : In India, the agriculture sector and its allied activities were the largest contributor to the national income. Thus these were labeled as the priority sectors. But unfortunately they were deprived of their due share in the credit. Nationalisation was urgently needed for catering funds to them.
- Developing Banking Habits : In India more than 70% population used to stay in rural areas. It was necessary to develop the banking habit among such a large population.
Demerits of Nationalization of Banks
- Inadequate Banking Facilities.
- Limited Resources mobilized and allocated.
- Lowered Efficiency and Profits.
- Increased Expenditure.
- Political and Administrative Inference.
List of Nationalized Banks in India
Currently there are following 21 nationalized banks in India as per the RBI website.
- Allahabad Bank.
- Andhra Bank.
- Bank of Baroda.
- Bank of India.
- Bank of Maharashtra.
- Canara Bank.
- Central Bank of India.
- Corporation Bank.
- Dena Bank.
- Indian Bank.
- Indian Overseas Bank.
- Oriental Bank of Commerce.
- Punjab & Sind Bank.
- Punjab National Bank.
- Syndicate Bank.
- State Bank of India
- UCO Bank.
- Union Bank of India.
- United Bank of India.
- Vijaya Bank.
- IDBI Bank.