DEPARTMENT OF TECHNICAL EDUCATION

ANDHRA PRADESH
Name : P. Samba Murthy, HCCP
Designation : Head of Department

Branch : D.C.C.P.
Institute : SRRS Govt. Polytechnic,
Sircilla
Semester : V - Semester
Subject : Banking – I
Subject Code : CCP – 504 (B)
Topic : Indian Banking Industry
Growth
Duration : 50 minutes
Sub-Topic :Nationalization of Banks
Teaching Aids : PPT
CCP504B.16 1
OBJECTIVES:

On completion of this period, you would be able to

 Understand the need for nationalization of banks
 Know working of nationalized banks

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INTRODUCTION
 The issue of nationalization of bank dates back to
1948.

 The banking system was controlled by a coterie of

industrialists and business magnates who had
used public funds to build up private industrial
empires

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 Soon after Independence, the demand for the
nationalization of Banks in India had come forward.

 Need for nationalization of commercial banks in

India

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Need for Nationalization of
Commercial Banking in India

 Defective ownership.

 Small industrial and business units were continuously

and consistently ignored.

 Agricultural credit was never seriously considered.

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Need for Nationalization of
Commercial Banking in India

 Public savings were used to support anti-social and

illegal activities against the general public.
 Very slow pace of the economic development of the
country.
 Biased credit deployment policy.
 Unhealthy practices of the banks in the pre-nationalized
period.

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Need for Nationalization of
Commercial Banking in India
 In late 1960s, nationalization of banks was considered as
one of the measures to achieve the objective of growth
with distributive justice.

 On July 19, 1969, the Government of India through an

Ordinance nationalized 14 major commercial banks in
the country with deposits exceeding Rs.50 corers each.

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Need for Nationalization of
Commercial Banking in India
 Again on April 15, 1980, 6 more commercial banks
were nationalized.
 Thus, about 90 per cent of the country’s commercial
banking system is now in the public sector.
 The nationalization was described as ‘historic’,
‘momentous’, ’bold’ and timely by some economists but
it was also criticized as wrong and untimely by others.

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Working of Nationalized Banks

 Nationalization of major commercial banks is the

most significant development in the commercial
banking system of India.

 The progressive nationalization of banks has

increased the role of public sector banking in the
country.

CCP504B.16 9
The Nationalized banks had played a
pivotal role in building up of
 Infrastructure development.
 Extensive banking facilities.
 Economic growth and promote key sectors like
agricultural and industry.

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The Nationalized banks had played a
pivotal role in building up of

 Mobilizing resources.
 Providing credit facilities to various kinds of
economic activities.
 Improving rate of savings in the country.
 Development of industry and agriculture.

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SUMMARY

 Nationalization of banks was considered necessary

to stimulate economic growth and to promote key
sectors of the economy.
 The Government of India nationalized 14 major
banks with deposits of Rs.50 crores on July 19,
1969. Again on April 15, 1980 six more banks were
nationalized.

CCP504B.16 12
 SUMMARY

 There has been a widespread demand that major banks

should be not only socially controlled but publicly owned.
The nationalization of banks had played a significant role
in developing certain activities

CCP504B.16 13
Frequently ask questions

2. What factors influenced for the nationalization of

banks
3. How many banks were nationalized up to 1980

CCP504B.16 14
Quiz

1. In which year the Government of India

nationalized major commercial banks
a) 1935
b) 1953
c) 1964
d) 1980

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Quiz

• The nationalization of banks were

needed due to

a) Defective ownership
b) Biased credit deployment
c) Agriculture credit was ignored
d) All the above

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Quiz

1) The banks whose deposits exceeded

the following were nationalized in 1969

a) 100 crores
b) 50 crores
c) 500 crores
d) None of the above

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