The systemic banking crisis in 2008 led to the quasinationalisation of two uk listed banks. According to the imf international monetary fund, nationalisation is defined as government taking control over assets and over a corporation, usually by acquiring the majority stake or the whole stake in the corporation. Bank have been nationalised for fulfilling various socioeconomic objectives. Nationalisation of commercial banks src decree no 2 of 2 january w w. Feb 15, 2020 the advantages of nationalization of banks are discussed below.
Bank nationalisation day came into existence ever since 14 banks were nationalised by the government on july 19, 1969. Fdic takeovers typically happen when a bank fails due to insolvency. Objectives of nationalization of commercial banks in. An exclusive project report on the commercial banks of india. Nationalisation of banks in india the economic effect. Banks in india nationalisation of banks essay example. To talk about regulating economic life and yet evade the question of the nationalisation of the banks means either betraying the most profound ignorance or deceiving the common people by florid words and grandiloquent promises with.
Despite the provisions, control and regulations of reserve bank of india, banks in india except the state bank of india or sbi, continued to be owned and operated by private persons. The nationalised banks were credited by many, including former finance minister p. In the indian banking scenario, most public sector banks are referred to as nationalised banks. Modern banking in india originated in the last decade of the 18th century. The purchase of shares nationalisation is a financial transaction, except if this is operated by mean of confiscation this is another flow. Commercial banks belonged to the private sector those times. Commercial bank and its functions class xll economics. The royal bank of scotland and lloyds banking group national audit office 2010. Under the denomination of privatisation, several types of statistical issues may be considered.
The stated reason for the nationalisation was to give the government more control of credit delivery. Candidates we have given the government banks in india list, list of public sector banks in india, foreign banks in india, number of top banks in india and all government banks in india. The nationalized banks in india expanded their branches and spread their activities across the country. After india got independence, the government of india goi planned on a systematic economic development of the country. Nationalisation of banks a significant milestone in indian banking happened in the late 1960s when the government nationalised on 19th july, 1969 14 major commercial indian banks. Presentation history and nationalisation of banks in india 2.
Factors responsible for nationalisation of banks in india 2. Chidambaram, to have helped the indian economy withstand the global financial crisis of 20072009 1949 1 january reserve bank of india nationalised. Banking history of mexico and the 1982 nationalization of. The banks, as we know, are centres of modern economic life, the principal nerve centres of the whole capitalist economic system. The term commercial banks refers to both scheduled and non scheduled commercial banks regulated under the banking regulation act, 1949. Eff calls for nationalisation of banks iol news that. Nationalisation of the countrys banks would seriously undermine what fragile levels of confidence remain in the economy and society the banking association of south africa cautioned on tuesday. Considerable emphasis is placed by the boards of both banks on derisking the balance sheet, though whether this is directly related to nationalisation or not is debatable. Government revenues can be achieved by a combination of taxes and dividend payments. Banking sector hits back at malemas proposed nationalisation. Nationalization of commercial banks gr8ambitionz prepare for. Nationalization of commercial banks gr8ambitionz prepare.
The stated purpose of bank nationalisation was to ensure that credit allocation occur in accordance with plan priorities. Commercial bank was hardly advancing any loan to social sector. Banks in india list of banks in india private, public. Nationalisation of commercial banks src decree no 2 of 2. It was the need of the hour to direct the funds for the needy and required sectors of the indian economy. Lead bank scheme, the new strategy of banking and area development, 6. With the second step of nationalisation, the goi controlled around 91% of the banking business in india. Accordingly, five year plans came into existence since 1951. After the nationalisation of central banks in 1974 and 1975, further nationalisation was seen only in 2010. Decoding indira gandhis bank nationalisation of 1969. It would enable the government to obtain all the large profits of the banks as revenue. The advantages of nationalization of banks are discussed below. Nationalization would safeguard interests of the public and increase their confidence there.
The opposites of nationalization are privatization. After this period the public sector undertaking banks expanded their reach and grew in leaps and bounds. Nationalised banks in india, list of government banks in india. According to bank economists, during the last 28 years of nationalisation, the branches of the public sector banks rose 800 per cent from 7,219 to 57,000, with deposits and advances taking a huge jump by 11,000 per cent and 9,000 per cent to rs 5,035.
Currently there are 27 nationalised commercial banks. A second step of nationalisation of 6 more commercial banks followed in 1980. Justification for the nationalisation of commercial banks. F riends, we are presenting you the the pdf file of january 2020 current affairs. Nationalization of indian banks mba knowledge base. A commercial bank accepts deposits from the people for making. Performance of commercial banks since nationalisation of. Later on, in the year 1993, the government merged new bank. The nationalisation of the commercial banks in india was a very controversial issue till the nationalisation of 14 major banks. According to bank economists, during the last 28 years of nationalisation, the branches of the public sector banks rose 800 per cent from 7,219 to 57,000, with deposits and advances taking a huge jump by 11,000 per cent and 9,000 per cent to rs. Indian banking sector reform was carried out in 1980 with more banks. Encouraged by the success of first spell of nationalization of banks, six more banks in the private sector, having deposits more than rs. Four years after nationalisation bhabatosh datta it is not the differences in operational status which make one question the effectiveness of the nationalisation of banks in 1969. The vast majority of economists get very worried when public ownership of banks is brought up because, as frank barry discussed yesterday, nationalised banks are particularly likely to be subject to abuse by p oliticians and their crony capitalist mates.
The term commercial banks refers to both scheduled and nonscheduled commercial banks regulated under the banking regulation act, 1949. Nationalisation of bank nationalization economy of. Pdf this article is a case study of the political economy of bank restructuring, privatization and. Using property rights and agency theory as the theoretical. They mobilize the resources from all the sections of community by way of deposits and provide them to industries and others by way of granting loans.
During prenationalisation period 196168, commercial banks in india were not very much interested in. Nationalisation of the imperial bank economic and political. Nationalizing the banks can be a temporary measure, and it is regularly used to rescue banks in financial trouble. As nationalisation of major commercial banks is an established fact now, the case against nationalisation is uncalled for and hence of purely academic interest. Top 10 reason for nationalization of commercial banks. Banking history of mexico and the 1982 nationalization of banks. No other aspect of credit policy has attracted more attention in public discussion, pressuregroup operations, and with the authorities than that of the sectoral allocation of commercial bank credit. These nationalised banks are the majority of lenders in the indian economy. On 19 july 1969, the indira gandhiled congress government nationalised 14 commercial banks of the country. Banking sector hits back at malemas proposed nationalisation of commercial banks 2 years ago 408 views by briefly team economic freedom fighters eff leader julius malema introduced a debate in the national assembly yesterday in which he called for the nationalisation of all commercial banks in south africa without compensation. Introduction the difficulty of the task of the reserve bank of india in dealing with the banking system in the country does not lie in the multiplicity of banking units alone. An institutional comparison of private shareholding in the.
Nationalisation of the imperial bank h t parekh how are the shareholders to be compensated when the imperial bank and the state hanks merge in the proposed state bank of india. During pre nationalisation period 196168, commercial banks in india were not very much interested in providing. In the modern world, the banks perform a large variety of functions. This is a model similar to that of botswanas diamond industry. Nationalisation of commercial banks in india is a unique experiment of. Jun 15, 2019 nationalizing the banks can be a temporary measure, and it is regularly used to rescue banks in financial trouble. Important details of nationalization of commercial banks. After the nationalisation of central banks in 1974 and 1975, further nationalisation was seen only in 2010, with the nationalisation of the national bank of austria.
Prenationalization and postnationalization period of. Commercial bank and its functions class xll economics youtube. Lets start with what i see as the single best argument against nationalisation. Pdf bank nationalization, restructuring and reprivatization. Nationalisation of indian banks and their progress after nationalisation the banks are the custodians of savings and powerful institutions to provide credit. February 2009 7 introduction b ank nationalization is the topic du jour in washington and on wall street. It will he inconsistent to have two different principles of valuation market price of the shares in one case and the value of the assets in the case of the others. Banks in india nationalisation of banks essay sample. The body described the debate in parliament as alarming saying it was critical that the treasury move quickly and publicly to provide. Eight developments in commercial banking after independence with table are. The nationalization of indian banks took place with an aim to achieve following major objectives. Nationalization usually refers to private assets or assets owned by lower levels of government, such as municipalities, being transferred to the state. Nationalisation of bank nationalization economy of india.
What does it mean to nationalize banks and industries. The fdic steps in takes control, and sells the bank to another bankusually over a weekend. Nationalisation of banks in india linkedin slideshare. In this article we will discuss about the nationalisation of commercial banks in india. Factors responsible for nationalisation of banks in india. The most important fact is that the 14 banks have been allowed to operate in a manner far. The second wave of nationalisation took place in 1980 with 6 more commercial banks got nationalised. The 1982 nationalization of banks alejandro serrano, the university of texas, college of business administration, usa. The six banks nationalized in the second spell were. Adverse effects on the development of private sector. Objectives of nationalization of commercial banks the main objective of nationalization of banks was to ensure that the banking system serves a much wider section of the community by dispensing credit to the poorest and weaker sections of the society and also to remove the regional disparities and help in development of the economy in. Rbis statistical tables relating to banks in india, various issues. Make use of the list of banks given here for competitive exams like upsc, railways and mainly for bank exams. Read this article to learn about the different periods of commercial bank credit in india prenationalization and post nationalization periods.
May 09, 2017 in this video i am explaining the commercial bank and its functions primary function accepting deposit, advancing loan secondary function overdraft facility, discounting bill of exchange. Jul 28, 2014 the banking companies acquisition and transfer of undertakings act 1970 under which the private banks were nationalized with effect from 19th july 1969 specified the aim of the nationalization of commercial banks as to control the heights of the economy and to meet progressively and serve better the needs of development of the economy in conformity with national policy and objectives and. Any reorientation of commercial bank lending in favour of priority areas perforce implies a critical questioning of credit. Nationalization, or nationalisation, is the process of transforming private assets into public assets by bringing them under the public ownership of a national government or state. Aug 11, 2016 encouraged by the success of first spell of nationalization of banks, six more banks in the private sector, having deposits more than rs. The stated reason for the nationalisation was more control of credit.
This economic planning basically aimed at social ownership of the means of. In this article we will discuss about the functions and role of commercial banks. Drivers of nationalisation nationalisation is not new in global economic evolution. In 1980, 6 more commercial banks were nationalized and became public sector banks. Nationalisation in the reasons to nationalise south. Evaluation of commercial banks after nationalisation. Nationalization of banks promulgation of the banking companies acquisition and transfer of undertaking ordinance 1969. In this video i am explaining the commercial bank and its functions primary function accepting deposit, advancing loan secondary function overdraft facility, discounting bill of exchange. The banking companies acquisition and transfer of undertakings act 1970 under which the private banks were nationalized with effect from 19th july 1969 specified the aim of the nationalization of commercial banks as to control the heights of the economy and to meet progressively and serve better the needs of development of the economy in conformity with. After independence the government of india goi adopted planned economic development for the country india. Nationalisation of the commercial banks international journal of. Jul 19, 2016 bank nationalisation day came into existence ever since 14 banks were nationalised by the government on july 19, 1969. Among the first banks were the bank of hindustan, which was established in 1770 and liquidated in 182932. Arguments against nationalisation of banks lack of able, efficient and experienced employees.
1488 1021 588 780 270 664 1137 995 1400 1365 73 1088 1146 477 1087 1360 1393 920 164 436 594 409 770 559 1081 1461 739 640 1091 1355 1478 1241 1225 442 135 600 660 1154 1215 1380 909 1478 975 604 1485 177