Nationalization of Banks in India | Indian Banking System

Before we start discussing in detail about the Nationalization of Banks, let’s understand the exact meaning of the term “Nationalization.” So, Nationalization is a process of transferring the ownership from private individuals to the Government authorities. Similarly, in the case of the Nationalization of Banks in India which lasted in two phases, the ownership, regulation, and control of the banks were transferred in the hands of the Government from private authorities.  The Nationalization of Banks was a step to end the private monopoly and channelize the Indian Banking System as per the laws and regulations of the Reserve Bank of India. 

Image Courtesy: The Economic Times

The Nationalization of Banks was first enacted during the tenure of the then Prime Minister of India, Smt. Indira Gandhi. Before the process of Nationalization was initiated, notwithstanding the provisions and regulations of the Reserve Bank of India, all the banks in India except the State Bank of India (SBI), were owned and managed by private persons.

The Nationalization of Banks in India took place in two different phases. In the year 1969, the Government of India issued the Banking Companies (Acquisition and Transfer of Undertakings) Ordinance, and following the provisions of this Ordinance, 14 largest commercial banks were nationalized on 19 July 1969. This was the first phase of the Nationalization of Banks in India. Later in the year 1980, the Government of India proceeded further with the Nationalization of 6 other banks on 15 April 1980. 

Let’s see the Nationalization process as mentioned in the table given below:

Phase	Date	Banks Nationalized
Phase - I	19th July, 1969	14 Banks
Phase - II	15 April 1980	06 Banks

Later on, the Government of India merged the New Bank of India, which was nationalized during the second phase, with Punjab National Bank in 1993. Due to this merger, the number of nationalized banks was reduced from 20 to 19. 

Banks Nationalized in 1969 :

1. Allahabad Bank

2. Bank of Baroda

3. Bank of India

4. Bank of Maharashtra

5. Central Bank of India

6. Canara Bank

7. Dena Bank

8. Indian Bank

9. Indian Overseas Bank

10. Punjab National Bank

11. Syndicate Bank

12. UCO Bank

13. Union Bank of India

14. United Bank of India

Banks Nationalized in 1980 :

1. Punjab and Sind Bank

2. Vijaya Bank

3. Oriental Bank of India

4. Corporation Bank

5. Andhra Bank

6. New Bank of India

Later on, the Government of India merged the New Bank of India, which was nationalized during the second phase, with Punjab National Bank in 1993. This merger resulted in the reduction of the number of nationalized banks from 20 to 19.