DR.

RAM MANOHAR LOHIYA

NATIONAL LAW UNIVERSITY
LUCKNOW

ACADEMIC SESSION
2018-19

NATIONALISATION OF BANKS AND ITS

IMPACT ON INDIAN ECONOMY

Submitted by: Submitted to:

Animesh Kumar Rajoriya Dr. Mitali Tiwary
Roll No. 22 Asst. prof. (ECONOMICS)
INTRODUCTION
Banking in India, in the modern sense, originated in the last
decade of the 18th century, among the first banks were the Bank of
Hindustan, which was established in 1770 and liquidated in
1829–32; and the General Bank of India, established in 1786 but
failed in 1791. For many years the presidency banks had acted as
quasi-central banks, as did their successors, until the Reserve
Bank of India was established in 1935, under the Reserve Bank of
India Act, 1934.
After independence the government of India (GOI) adopted
planned economic development for the country (India).
Accordingly, five year plans came into existence since 1951. This
economic planning basically aimed at social ownership of the
means of production. However, commercial banks were in the
private sector those days. In 1950-51 there were 430 commercial
banks. The government of India had some social objectives of
planning. These commercial banks failed in helping the
government in attaining these objectives. Thus, the government
decided to nationalize 14 major commercial banks on 19 th July
1969. All commercial banks with a deposit base over Rs.50 crores
were nationalized. It was considered that banks were controlled
by business houses and thus failed in catering to the credit needs
of the poor sections such as cottage industry, village industry,
farmers, crafts men, etc.
The second dose of nationalisation came in April 1980 when
more banks were nationalized, 6 more private banks were
nationalised. These nationalised banks are the majority of lenders
in the Indian economy. They dominate the banking sector because
of their large size and widespread networks.
RESEARCH QUESTIONS
 What was the need for nationalisation of banks?
 What were the objectives behind the nationalisation of
banks?
 Has nationalisation actually benefitted India?
 What are the achievements of nationalized banks?

OBJECTIVES
• To study the objectives behind nationalisation of banks.
• To study the impact of nationalisation on functioning of
commercial bank.
• To study the pre and post nationalisation period.
• To analyse the merits and demerits of nationalisation.
• To study the achievements and criticism of nationalisation.

RESEARCH METHODOLOGY
The research methodology adopted for this project has been mainly a
doctrinal and an analytical one. Various books newspaper articles and
magazines etc. have been used for this purpose. Web source has also
been consulted for the research. From the collected material and
information, research proposes to critically analyse the topic of
the study and tries to reach the core aspects of the study.
TENTATIVE CHAPTERISATION
 Introduction.
 Nationalisation of banks in India.
 Need for nationalisation of banks in India.
 Objectives behind nationalisation of banks in India.
 The bank nationalisation case.
 What are the benefits received by nationalisation.
 Conclusion.
 Bibliography.

REFERENCES
 Newspaper referred: The Hindu, The Indian Express.
 Articles referred: Nationalisation of banks in India –
Introduction, Objectives and Demerits, Allow nationalised
banks to serve the objectives of nationalisation once again,
various reports of govt. of India.
 Books referred: Class 11th Economics book, Agarwal B.P
1981. Commercial banking in India.
 Sites referred: www.moneylife.in, www.kalyan-
city.blogspot.com, www.thehindubusinessline.com.