Phases of Nationalization Indian Banks

Nationalization of Banks completed in Five phases as follows:

The growth of banking sector was very slow during the first phase and banks also experienced periodic failures between 1913 and 1948. There were approximately 1100 small banks at that time. To streamline the functioning and activities of commercial banks, the Government of India came up with The Banking Companies Act, 1949 which was later changed to Banking Regulation Act 1949 by amending Act of 1965. Reserve Bank of India was vested with wide-ranging powers for the supervision of banking in India as the Central Banking Authority.

First Phase: As a first step the government, realizing the need for a proper coordination between monetary and fiscal policies, nationalized the Reserve Bank of India on January 1,1949 and promulgated the banking regulation Act in March to equip it with more power and authority for regulating and supervising the banking system.

Second Phase: In the second phase of bank nationalization the Imperial Bank of India was nationalized and the State Bank of India was set up on 1 July,1955.

Third Phase: In the third phase,7 State associated banks were nationalised in 1959 and attached with the State Bank of India as its subsidiaries. There banks were:

  1. State Bank of Bikaner and Jaipur.
  2. State Bank of Hyderabad.
  3. State Bank of Indore.
  4. State Bank of Mysore.
  5. State Bank of Patiala.
  6. State Bank of Saurashtra.
  7. State Bank of Travancore.

Forth Phase (Nationalisation of 14 Banks): On 19 July, 1969 the nationalisation of 14 banks took place whereby the following banks were nationalised:

  1. Bank of India.
  2. Union Bank of India.
  3. Bank of Baroda.
  4. Bank of Maharshtra.
  5. Punjab National Bank.
  6. Indian Bank.
  7. Indian Overseas Bank.
  8. Central Bank of India.
  9. Canara Bank.
  10. Syndicate Bank.
  11. United Commercial Bank.
  12. Allahabad Bank.
  13. United Bank of India.
  14. Dena Bank.

Fifth Phase: On 15 April, 1980 the second nationalisation took place whereby the following six banks were nationalised:

  1. Andhra Bank.
  2. Corporation Bank.
  3. New Bank of India.
  4. Oriental Bank of Commerce.
  5. Punjab and Sind Bank.
  6. Vijaya Bank.

In October 1993, the New Bank of India was merged with the Punjab National Bank. Therefore, at present there are only 19 Nationalized banks in the country besides the Reserve Bank of India.