Letter to BS: Nationalised banks mobilised savings of the poor for 50 years
Bank branches have taken root in every nook and corner of the country
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Nationalised banks are in the headlines for the wrong reasons these days. However, these banks are now headed for their golden jubilee. It was on July 19, 1969, by means of an Ordinance, that the Indira Gandhi-led Congress government nationalised 14 commercial banks primarily due to two reasons.
The first was the unpredictable manner in which these functioned as private entities. There were 361 private banks which failed between 1947 and 1955, translating to an average of over 40 banks per year resulting in depositors losing all their money. Second, these were seen as catering to large industries and business houses, ignoring the agriculture sector. In 1969, the total deposits were Rs 48 bn but now it is Rs 114 trillion.
Bank branches have taken root in every nook and corner of the country, providing employment to a huge section of the population. For 50 years, these banks have mobilised small savings even from the people below the poverty line adding to the nation’s economic might. All state and central governments have used this space to implement their socio-political objectives. Fifty years is a long time to take a dispassionate view of the 1969 decision.
The first was the unpredictable manner in which these functioned as private entities. There were 361 private banks which failed between 1947 and 1955, translating to an average of over 40 banks per year resulting in depositors losing all their money. Second, these were seen as catering to large industries and business houses, ignoring the agriculture sector. In 1969, the total deposits were Rs 48 bn but now it is Rs 114 trillion.
Bank branches have taken root in every nook and corner of the country, providing employment to a huge section of the population. For 50 years, these banks have mobilised small savings even from the people below the poverty line adding to the nation’s economic might. All state and central governments have used this space to implement their socio-political objectives. Fifty years is a long time to take a dispassionate view of the 1969 decision.