Nationalisation of banks in India Upsc

Nationalisation of Banks

Nationalisation of banks means It is an act of taking a bank and its assets owned by the private sector into the public ownership of a national government by purchasing a majority stake that is more than 50% owned by the government.

Reason of Nationalisation of Banks

After the Independence, the Government took several plans on Planned economic development. As a result, Five Year plans came into existence in 1951.

The goal of economic planning is social welfare. The commercial bank was Private before the Independence and these were a failure in helping the Government’s objective on social welfare and planning.

Shortly it can be said that to “Improve credit facility“.

Due to that, the Union Government decided to Nationalize the 14 major commercial banks and were Nationalised on 19 July 1969.

Again the Union Government, Nationalized 6 commercial banks in 1980.

Objectives of Nationalization

The main objective is to attain social welfare. The small business sectors such as agriculture, small, and village industries need funds for their growth and for further economic development.

To curb the private monopolies and to ensure a supply of credit to social backward sections.

To encourage the rural people to have the banking habit, as nearly 70% of the population living in rural areas.

Nationalisation of banks
Nationalisation of banks in India Upsc

The nationalization of banks was an answer to reduce the regional imbalances, as now it can be expanded to all the areas of the country.

Earlier the number of banks was inadequate, but after the Nationalization, new branches were opened in both rural and urban areas.

14 Nationalised banks in 1969

Allahabad Bank, Bank of Baroda, Bank of India, Bank of Maharashtra, Central Bank of India, Canara Bank, Dena Bank, Indian Bank, Indian Overseas, Punjab National Bank, Syndicate Bank, UCO Bank, Union Bank, United Bank of India

Advantages of Nationalisation of Banks

To provide credit facilities to the priority sector and to reduce the regional imbalance.

To check monopoly in getting a loan and to keep the people’s money is technically safe with Nationalised banks.


Low performance of banks. Again, monopoly of certain industries and people only getting loans due to their political influence. Also, there is bad Management and low recovery.

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* * All the Notes in this blog, are referred from Tamil Nadu State Board Books and Samacheer Kalvi Books. Kindly check with the original Tamil Nadu state board books and Ncert Books.
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