History of Banking in India : Phase-II

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The Second Phase of banking in India starts from 1935 when Reserve Bank of India was established. Between the period of 1911-1948, there were more than 1000 banks in India, almost all small banks. The Reserve Bank of India was constituted in 1934 as an apex Bank, however without major government ownership. Immediately after the independence, the Government of India came up with the Banking Companies Act 1949. This act was later changed to Banking Regulation (Amendment) Act 1949. Further, the Banking Regulation (Amendment) Act of 1965 gave extensive powers to the Reserve Bank of India and via this act, the Reserve Bank of India was made the Central Banking Authority.

The banking sector reforms started immediately after the independence. These reforms were basically aimed at improving the confidence level of the public because in those days, most banks were not trusted by the majority of the people. Instead, the deposits with the Postal department were considered rather safe.

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, seven subsidiaries of the State Bank of India were nationalized by the Indira Gandhi government. In 1969, fourteen major private commercial banks were nationalized. These 14 banks Nationalized in 1969 are as follows:

List of 14 Banks Nationalized in 1969
1.Central Bank of India
2.Bank of Maharashtra
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.United 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. After the nationalisation of banks, the branches of the public sector banks in India rose to approximately 800 per cent in deposits, and advances took a huge jump by 11,000 per cent. Government ownership gave the public implicit faith and immense confidence in the sustainability of public sector banks.

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Comments

  • suresh
    Reply

    This is a test comment

  • Anjaneya
    Reply

    Sir, I believe on April 15,1980 Six more banks were nationalised (instead of 7 which you have mentioned) and the total number of nationalised banks became 20. In 1993 New bank of India was merged with Punjab National Bank and thus the number of nationalised banks came down to 19.

  • Anjaneya
    Reply

    Thank you sir for updating the information. You are doing a great job for us. It is really commendable.

  • mayank
    Reply

    first of all thank u very much . ur information give me a great knowledge . but in the above history there is some doubt from my side .the doubt is that SBI was not nationlized in 1955 from that time SBI is working under RBI . my economic’s sar said that in 1955 IMPERIAL BANK OF INDIA was only change in SBI . it was not nationlized . plz clear this doubt as soon as possiable

  • seema
    Reply

    thanks for the worthy knowledge……

  • Niketa
    Reply

    Thanks for providing us amazing & incredible knowledge of Banking sector

  • ajay
    Reply

    great !!!
    best for ga

  • nisha
    Reply

    thank u sir

  • sarna krish
    Reply

    kudos !!!.Gud job.Pls try educating masses.U r capable of doing that.

  • swati
    Reply

    the best site for all the informations related to bank.

  • sudhir kumar , saharsa bihar
    Reply

    thanku sir
    its very very important information for us which helps to increase banking awernass for banking examination

  • nisha saini
    Reply

    sir my GA sir said that SBI is not a nationalized bank…. In 1955 it named SBI from IMPERIAL BANK…. please clear my doubt..
    Thank u..

    • GKToday

      Ask your sir to go back to fundamentals. Imperial Bank of India was nationalised (under the SBI Act of 1955)

      • shailendra sharma

        Sir i am agree with you that Imperial Bank Of India was nationalized under the SBI act of 1955 but SBI and IDBI is not a nationalized bank both are public sector bank.

  • Shivam Raghav
    Reply

    Hello Sir…..

    All the content is precious but I have heard that SBI doesn’t a nationalized bank but here it is showing as a nationalized bank.

    Pls make me correct.

  • saugata
    Reply

    GKToday is absolutely right.
    SBI is nationalized in 1955. In 1980 there was 21 nationalized bank, later New Bank of India merged with PNB. Now no. of nationalized banks are 20.
    It is very easy to remember:
    19 nationalized bank is under IBPS. SBI is not under IBPS.

  • srinivas
    Reply

    Thank you saugata sir for clearing

  • Jitendra Sharma
    Reply

    Gud job… please mention about Tax nd Influation…

  • balu
    Reply

    thanku so much… u guys r doing gr8t job ….
    u cant even imagine how much is this site is useful for those who r prepareing for competative exams..and cant afford much money for training centres…thanku and god bless u…

  • selva
    Reply

    Very useful news I liked…

  • sujit kumar
    Reply

    thank u sir

  • Falguni
    Reply

    thanx its really learning.

  • kaplish
    Reply

    i am in confusion.how many nationalized banks are there.whether 19 or 21since ibps in po3 has notified 21 banks and some websites are saying there are 21 others are saying 19..plz reply asap

  • RAMESH
    Reply

    19 NATIONALISED BANK.1 IDBI.1 ECGC..TOTALLED TO 21

  • Ranjit
    Reply

    sir, when I visit ur site I saw written there sbi is a nationalized bank. then i goes to sbi Wikipedia i didn’t saw anywhere write sbi is a nationalized bank. it just change his name from Imperial Bank of India TO SBI

  • mitu
    Reply

    thank u very much sir for this information.

  • athira.p
    Reply

    Thankyou for this valuable information

  • divya rastogi
    Reply

    When IDBI and Bhartiya mahila bank were nationalized?
    Rply soon

  • sakshi singh thakur
    Reply

    Thanks for providing knowledge.