Phase 2 of Indian Banking

Government of India has taken major steps in this Indian Banking Sector Reform after independence. In 1955, it nationalised Imperial Bank of India with extensive banking facilities on a large scale operation in rural and semi-urban areas. It formed State Bank of India to act as the principal agent of RBI and to handle banking transactions of the Union and State Governments all over the country.

State Bank of India, including its seven subsidiaries was nationalized in 1960, 1969, major process of nationalisation was carried out. It was the effort of the former Prime Minister of India, Mrs. Indira Gandhi. 14 major commercial banks in the country were nationalised. They are;

Ø  Central Bank of India

Ø  Syndicate Bank

Ø  Union Bank

Ø  Bank of Baroda

Ø  Canara Bank

Ø  Indian Bank

Ø  UCO Bank

Ø  Bank of India

Ø  Bank of Maharashtra

Ø  Dena Bank

Ø  Punjab National Bank

Ø  Indian Overseas Bank

Ø  Allahabad Bank

Ø  United Bank of India

Second phase of nationalization Indian Banking Sector Reform was started in 1980 with seven more banks. This step brought 80% of the banking segment in India under Government ownership.

The following are the important steps taken by the Government of India to Regulate Banking Institutions in the Country

1949: Enactment of Banking Regulation Act.

1955: Nationalisation of State Bank of India.

1959: Nationalisation of SBI subsidiaries.

1961: Insurance cover extended to deposits.

1969: Nationalisation of 14 major banks.

1971: Creation of credit guarantee corporation.

1975: Creation of regional rural banks.

1980: Nationalisation of seven banks with deposits over 200 crore.

After the nationalisation of banks, the branches of the public sector bank India grown to approximately 800% in deposits and advances took a huge jump by 11,000%.

Banking in the brightness of Government ownership gave the public implicit faith and immense confidence about the sustainability of these institutions.

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