write a note on nationalisation of banks
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Answer:
Currently, the Indian banking system is divided into commercial banks, cooperative banks, regional banks, etc. In commercial banks, there are two types of banks, public banks, and private banks. The important event in the history of Indian banks is the nationalization of banks. This made the way for India to become the leading economies of the world. In this article, we will give you a brief on the nationalization of banks in India
Explanation:
History of Indian banks
There are three phenomena in which banking in India can be divided. The pre-Independence phase which is before 1947. The second phase – 1947 to 1991. And the third phase from 1991 and beyond.
In the first phase, the banking system in India was established. Thus, it began with the foundation of the Bank of Hindustan in 1770.
It operated till 1832. There were many banks which were a success and still continue to lead. These were Allahabad bank, Bank of India, Punjab national bank, etc. Thus, the main event during this time was the merger of banks.
Bank of Madras, Bank of Bombay, and Bank of Bengal merged and formed an imperial bank of India. Later it named as the reserve bank of India.
The second phase is broadly known as the nationalization of banks in India. Thus, considering the economic planning, this phase was the foundation for today’s economic condition.
The third phase was marked by the development of banks. This was due to the liberalization of economic policies. Many large and private banks came into the picture during this time.
The Nationalization of Banks
The first bank in India to be nationalized was the Reserve Bank of India which happened in January 1949. Further, 14 other banks were nationalized in July 1969.
Bank of India, PNB, and many others were part of this nationalization. While the next phase of nationalization saw 6 other commercial banks were nationalized in 1980. These included Vijaya bank, a new bank of India, Corporation Bank, and others.
The needs for nationalization of banks arose due to many reasons. These were catering to the needs of big business houses and large industries.
Further, sectors such as exports, agriculture, and the small-scale industries were lagging behind. The moneylenders used to export the poor masses in India. These all were taken into consideration during the nationalization of banks.
Also, for a rural section of India, the regional rural banks (RRBs) were formed. The objective was to serve large masses of the unreserved rural population.
Further, the specific requirements of sectors like foreign trade, housing, and agriculture were met. This was met by establishing NABARD, NHB, SIDBI, and EXIM.
Explanation:
Control of huge resources: The taking over of commercial banks would enable government to have control over huge resources by which it can start large scale industries. It can also divert funds for various essential industries, according to the conditions prevailing in the country.Nationalization of banks is an act of taking a bank owned by private sector into the public ownership of a national government by purchasing a majority stake (i.e. more than 50%) by the government.Improve in bank efficiency: Due to the nationalization of banks, the efficiency of the banking system in India improved. This also boosted the confidence of the public in banks. Small scale industries boost: The sectors that were lagging behind like small-scale industries and agriculture got a boost.