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The record of the bank can be drawn back to the colonial period. Throughout this moment, the banking system in India was established. It started in the year 1770 with the structure of the bank of Hindustan.
The Banking system of India Indian is currently split into commercial, regional, and cooperative banks. Commercial banks are categorized into two types, public financial banks and private financial banks.
A significant event in the Indian banks is the Nationalization of banks. The history of Nationalization can be traced back to 1949, January, when the Reserve Bank Of India was nationalised. It has assisted India in emerging as a major economy around the globe.
The Indian banking system has passed many years of Bank Nationalisation efficiently. Nationalised banks have added much to the economic situation after that. On that note, let’s get deep right into the concept of the Nationalization of Indian banks.
History Of Nationalisation Of Banks In India
After Independence, several Banks started running during that period. Those banks are operating even today, like Bank Of India, Allahabad Bank, and Punjab National bank. This duration was noted to be the merging duration combined with many banks.
The Imperial bank is a notable instance because of the merging of the Bank of Bengal, the Bank of Madras, and the Bank of Bombay, which later became the Reserve Bank of India.
The 2nd phase started in 1947 and 1991, majorly referred to as the Nationalising period for Indian Banks. Indira Gandhi came up with a plan supporting the Central Indian government. Shortly after that, the Indian government started providing the ordinance of the Bank in 1969. As well as after two weeks of the problem regulation, Parliament enacted the Bank (Acquisition and Transfer of Undertakings) companies act.
As an outcome, banks were nationalised, like- the Bank of India, Allahabad Bank, Union Bank of India, Bank of India, UCO Bank, Bank of Maharashtra, Punjab National Bank and Canara Bank.
In 1980, the 2nd round of Nationalisation began when six more banks, Oriental Bank of Commerce, Vijaya Bank, Punjab and Sind Bank, New Bank of India, Corporation Bank, Andhra Bank, obtained nationalisation. The delivery of credit to the Indian government was the significant reason. With the 2nd round of Nationalisation, the government regulated approximately ninety-one per cent of banking in the nation.
The third stage began in 1991. It is happening till today. The liberalisation policy was duly adhered to during this duration, and as an outcome, a few banks got authorised. They were referred to as the New generation banks. These banks are also tech-savvy, which is combined with Indian bank names. UTI Bank, HDFC Bank, Oriental Bank of Business, ICICI Bank, and IndusInd Bank.
The three fields of banks, i.e. Private, government and foreign, provided their fairest to advance the nation’s economy. As an outcome of the Liberalization of Indian banks, several private banks appeared.
The Requirement Of Nationalisation In India
The requirements for the Nationalization of banks emerged due to numerous reasons. These were dealing with the requirements of big business and also large markets. Additionally, exports, agriculture, and small industries were hanging back. However, these all were thought about throughout the Nationalization of Banks.
Later, the comprehensive demands of fields like foreign trades, real estate, and farming were satisfied, which was satisfied by establishing NABARD, NHB, SIDBI, and EXIM.
Conclusion
The nationalisation of banks boosted the financial system in India. Which likewise boosted the confidence of the public sector banks. The lagging sectors, like small markets and farming, obtained a boost. This led to a rise in funds and, therefore, an increase in India’s economic growth.
The dominance of banks was also reduced. Their monopoly was reduced. The Nationalisation of banks also increased bank penetration, which was generally seen in the rural areas of India.
