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When and why was India's 14 banks nationalized?

India's 14 banks nationalized

 When and why was India's 14 banks nationalized

• When the country became independent in 1947, the economic conditions of the country were not good. The traces of economic plunder by the British could be seen clearly over the country. Some people in the country had a lot of wealth and a large section was stuck in poverty.

• Lal Bahadur Shastri ji was killed during the Tashkent accord and when Indira Gandhi became Prime Minister in 1967, her hold on the party was not strong. People called him ' Gungi Gudiya' of Congress Syndicate. At such a time, Indira Gandhi had to change her image and take tough decisions.

Economic conditions of the country

• The concentration of economic power of the country was happening in only a few hands. Commercial banks were not supporting the process of social upliftment. 

• At this time, about 14% of the capital of the country was about 80% of the capital. These banks were occupied by only a few rich houses and the common man did not get any help from the banks. The money deposited in the banks was being invested in the same sectors where there was more profit potential.

• In 1967, Indira introduced 'Ten Point Program' in Congress Party. Its main points were the government's control over the banks, closing the financial benefits to 400 former royalty, fixing minimum wages and increasing investment in infrastructure development, agriculture, small scale industries and exports.

• Indira government issued an ordinance on July 19, 1969 and nationalized 14 major private banks in the country. The ordinance through which this was done is called 'Banking Companies Ordinance'. Later a bill with the same name was also passed and became a law.

• Let it be said that only before this nationalization in the country, only the State Bank of India was the official bank, which was nationalized in 1955.

Reasons to nationalize banks

• The main reason for nationalization was the "classbanking" policy adopted by big commercial banks. Banks used to provide loans and other banking facilities only to moneylenders. Class banking after nationalization; Changed to "MasBanking". There was unprecedented expansion of branches in rural areas.

Some other reasons are as follows-

1. Removing dominance of only a few rich houses from banks

2. To provide financial facilities to agriculture, small and medium industries, small traders on simple terms and to provide banking facilities to common people.

3. Make bank management professional

4. Encouraging new classes of entrepreneurs to stop the concentration of economic power in the country

Results of nationalization of banks

1. Another advantage of nationalization was that banks collected large amounts of money and were further divided into various important sectors including primary sectors, which included small industries, agriculture and small transport operators.

2. The government mandated 40% agricultural loans in their loan portfolio by giving directions to national banks, apart from this, loans were also distributed in other priority sectors which created large amount of employment.

3. Farmers grew small business and export resources and got proper financial services.

4. After nationalization, there was a tremendous increase in the branches of banks. Banks moved their business beyond the city to the village-countryside. According to statistics, in July 1969, there were only 8322 branches of banks in the country and by 1994, this figure had crossed 60 thousand.

• Due to the enthusiasm received in the first phase of nationalization, the government started the second phase of nationalization of banks in 1980, in which 6 more private banks were taken into government control.

• To summarize, it would be fair to say that the nationalization of 14 banks in 1969 by Indira Gandhi's government was a very good step for the national interest. All-round development of the country was made possible by the nationalization of banks.

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