The document outlines the evolution and nationalization of the Indian banking system, beginning with the establishment of the Reserve Bank of India in 1935 and the significant nationalizations in 1969 and 1980. It highlights the need for nationalization due to private banks' failure to serve rural and small-scale borrowers, leading to substantial growth in public sector banks, increased branch numbers, and improved access to banking services. The effects of nationalization include a dramatic rise in deposits and loans, as well as the introduction of priority sector lending to support underbanked areas.

1. NATIONALIZATION
SUBMITTED BY: AMAN SHAH
GARIMA VERMA
JANHAVI
JATIN MITTAL
SUDARSHAN

2. EVOLUTION OF INDIAN BANKING
SYSTEM
 Reserve Bank of India:
1. Initially established in 1935
2. Transfer to Public Ownership in 1949
 Three phases of Indian Banking System:
1. Early phase (1935 – 1969)
2. Nationalization of Indian Banks and up to 1991 prior to Indian banking
sector Reforms.
3. New phase with the advent of Indian Financial & Banking Sector
Reforms (post-1991).

3. NATIONALIZATION
 Nationalization is the process of taking a private industry or private
assets into public ownership by a national government or state
 14 banks nationalized in 1969
 6 banks nationalized in 1980
 Steps taken by the Government of India to Regulate Banking Institutions
in the Country:
1. 1949 : Enactment of Banking Regulation Act.
2. 1955 : Nationalisation of State Bank of India.
3. 1959 : Nationalisation of SBI subsidiaries.
4. 1961 : Insurance cover extended to deposits.
5. 1969 : Nationalisation of 14 major banks.

4. NEED FOR NATIONALIZATION
 Private commercial banks were not fulfilling the social and
developmental goals of banking which are so essential for any
industrialising country.
 Despite the enactment of the Banking Regulation Act in 1949 and
the nationalisation of the largest bank, the State Bank of India, in
1955, the expansion of commercial banking had largely excluded
rural areas and small-scale borrowers.

5. 1969
 Public has lesser confidence in the banks.
 Led to slower deposit mobilization.
 Savings bank facility provided by the Postal department was
comparatively safer.
 Moreover, loans were largely given to traders.

6. 2013
 After nationalisation, public sector bank branches rose to
approximately 800% in deposits and advances took a huge jump by
11,000%.
 Banks with Government ownership gave the public implicit faith and
immense confidence about the sustainability of these institutions.
 After 1991 reforms and technological up gradation of the banks, the
situation is such that the country is flooded with foreign banks and
their ATM stations.
 Efforts are being put to give a satisfactory service to customers.
 Phone banking and net banking is introduced. The entire system
became more convenient and swift.

7. EFFECTS OF NATIONALIZATION
 Increase in number of branches
 More concentration of banks in rural, unbanked and under
banked areas
 Increase in deposits, lendings
 Priority sector lendings were introduced.

8. BRANCH EXPANSION
 As a result of nationalization, the number of bank branches increased rapidly
 8262 branches (July 1969) to 64980 (June 1999), 68339 (June 2005) and 71839
(March 2007)
 Out of all bank offices, Rural banks made up:
1. 22.4% in June 1969
2. 50.5% in June 1999
 Breakdown of bank branch structure in June 2005:
1. Rural: 47.0%
2. Semi Urban: 22.5%
3. Urban: 16.8%
4. Metropolitan: 13.7%
 2012:
1. No. of branches in India: 101261
2. No. of commercial banks – 173 (scheduled: 169, non scheduled: 4)
3. RRB branches: 82

9. INCREASE IN DEPOSITS
 Expansion of banking system led to increase in the amount of
deposits.
 1969:
1. Deposits: 4880 crore rupees
 2012:
1. Aggregate Deposits in SCB 59090 billions: 59.09 lakh crore

10. LENDINGS
 We can also see an increase in loans after the reform period
 1969:
1. Loans: 3,06,829 lakh rupees
 2013:
1. 919189 Crore Rupees
 It is increasing at the rate of 10-15% per year since the
nationalization.

11. CREDIT
 1969:
1. 3,64,847 lakh rupees
 2012:
1. 46,11,800 Crore rupees

12. PRIORITY SECTOR LENDINGS

13. PRIORITY SECTOR LENDINGS
 SCB loan to priority sector 14710 billion = 14.7 lakh crore
 Share of priority sector advances = 29%