Banking System in India
- Banking System in India refers to a network of financial institutions, such as banks and credit unions, that handle financial transactions and provide financial services to individuals, businesses, and governments.
- These institutions, primarily, act as intermediaries between people with money i.e. savers, and those who need money i.e. borrowers.
Nationalisation of Banks
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History
- In 1955, India nationalised Imperial Bank of India with extensive banking facilities on a large scale, especially 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
- On 19th July 1969, a major process of nationalisation was carried out and 14 major commercial banks in India were nationalised.
- The second phase of nationalisation Indian Banking Sector Reform was carried out in 1980 with six more banks.
- This step brought 80% of the banking segment in India under Government ownership.
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Reasons
- For Social Welfare
- For Developing Banking Habits
- For Expansion of Banking Sector
- For Controlling Private Monopolies
- To Reduce Regional Imbalance
- For Prioritising Sector Lending