Brief History of Banking in India -3

Brief History of Banking in India -3

The first major step was Nationalization of the Imperial Bank of India in 1955 via State Bank of India Act.

• State Bank of India was made to act as the principal agent of RBI and handle banking transactions of the Union and State Governments.

In a major process of nationalization, 7 subsidiaries of the State Bank of India were nationalized by the Indira Gandhi regime. In 1969, 14 major private commercial banks were nationalized. These 14 banks Nationalized in 1969 are as follows:

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

The above was followed by a second phase of nationalization in 1980, when Government of India acquired the ownership of 6 more banks, thus bringing the total number of Nationalised Banks to 20. The private banks at that time were allowed to function side by side with nationalized banks and the foreign banks were allowed to work under strict regulation.

• After the two major phases of nationalization in India, the 80% of the banking sector came under the public sector / government ownership.

Please note the following sequence of events:

• Creation of Reserve bank of IndiaThe Reserve Bank of India was established on April 1, 1935 in accordance with the provisions of the Reserve Bank of India Act, 1934 with .....: 1935
• Nationalization of Reserve Bank of India In 1926, the Royal Commission on Indian Currency and Finance which is also known as the Hilton-Young Commission recommended the creation of a central bank. ..... : 1949 (January )
• Enactment of Banking Regulation Act : 1949 (March)
• Nationalization of State Bank of India : 1955
• Nationalization of SBI Subsidiaries : 1959
• Nationalization of 14 major Banks : 1969
• Creation of Credit Guarantee Corporation: 1971
• Creation of Regional Rural BanksNarasimham Committee and Genesis of RRBs We all know that the first stage of nationalization that took place in 1969 boosted the confidence of the public ..... : 1975
• Nationalization of 7 more banks with deposits over Rs. 200 Crore: 1980

The result was outstanding. The public deposits in these banks increased by 800% , as the government ownership gave the public faith and trust.
The third phase of development of banking in India started in the early 1990s when India started its economic liberalization.