The nationalization of banks was a key for expanding banking network in the un-banked areas. Public sector banks in India have already been exposed to increasing competition. Dena Bank - 1969 9. Direct finance to agriculture outstanding increased from Rs. Secrecy of customer's accounts: In spite of the assurances given and provisions made in the Act, businessmen still fear about the maintenance of the secrecy of the customer's accounts. Instead, the state owns nationalized assets.
Thus, there are contradicting objectives between Central Bank and commerÂcial banks. Deterioration in Customer Service: One of the important drawbacks of nationalisation of banks has been deteriorating customer service. Union Bank of India: This bank was initiated in 1919 and was nationalized in 1980. The second phase of nationalization of Indian banks took place in 1980, in which 7 more banks were nationalized with deposits over 200 crores. For most consumers, that system works quite well. We discuss below the justification, objectives, achievements and failures of nationalisation of commercial banks in India.
A basic distinction between public and private property consists in the fact that the former, in principle, is socially accountable, and this is enforced through Parliament and its committees. In March 1999 the out-standings to small businesses were Rs. Privatisation is a political process and has important economic and social implications that not only affect enterprise performance, but also social welfare and stability. These included augmentation of capital, higher coupon rates on Government securities and higher return on cash balances. Sector such as agriculture, small and village industries were in need of funds for their expansion and further economic development.
By the 1960s, the Indian banking industry has become an important tool to facilitate the development of the Indian economy. Therefore, the nationalisation of commercial banks will be necessary if the government wants to establish socialism. Stakeholder Losses: When nationalization happens, the previous owners and managers often lose although management may be fortunate enough to keep their jobs. United Bank of India - 1969 18. Let us see their views one by one.
The entire infrastructure that required was built by themselves or by the citizens for their use. Bank of Maharashtra - Click here 6. Objectives of Nationalized Banks in India: Some of the main objectives of nationalization banks in india were: Social Welfare : Most of the small, village industries and agricultural sectors need funds for their development and expansion and further economic development Controlling Private Monopolies : Prior to nationalization, majority of banks were controlled by private sector and corporate families. Nationalization was must for making the funds available to that sector. Such an important power should not be in the private sector.
The bank's headquarter is situated in Vadodara, Gujarat. The bank's total in 2016 was approximately Rs 18,884. Branch Expansion: As against 8,262 branches at the end of June 1969, the total number of commercial bank branches at the end of March 2001 was 63,380. Privatisation opens the way for the domination of the economy by foreign capital. It is considered as the beginning of state capitalism and not socialism in India. It was the only merger between nationalized banks and resulted in the reduction of the number of nationalized banks from 20 to 19.
Central Bank of India h. Branch expansion: To argue that nationalisation will help to facilitate branch expansion to rural areas much more rapidly than the private banks cannot be supported by facts. Banks had to reserve as much as 40 percent of credit to the priority sectors agriculture and small and medium industries. It is a part of the. United Bank of India 19. Thus, nationalisation of banks ensures the availability of resources to the plan-priority sectors.
In 1980, another six banks were nationalized, and thus raising the number of nationalized banks to20. The directors of these banks happened to be the same industrialists who established monopoly control on the bank fiÂnance. West Bengal - 30 27. Let us see their views one by one. But the capital contributed by their shareholders was only Rs. The Indian government's decision to nationalize 14 commercial banks in 1969 is a very controversial topic and you can find both avid supporters and opponents on the issue.