Essay --

The 1960s was one of the most eventful and perhaps the most troublesome decade in India’s post-Independence era. This decade saw major events like the two wars – one each with China and Pakistan, the annexation of Goa, the deaths of Nehru and Shastri, the Bihar famine,the abolition of privy purses etc. Near the end of the decade, the then prime minister of India, Indira Gandhi, took another major policy decision -- the bank nationalisation. In 1969 the Government of India decided to nationalise 14 major private commercial banks. Bank nationalisation was not a new concept for India as in 1955 the Imperial Bank of India was nationalised and renamed as State bank of India (SBI). In 1959 seven subsidiaries of SBI were formed by nationalising seven state banks. But it was the 1969 nationalisation that caused maximum impact on political and economic spectrum so much so that even Jayaprakash Narayan called this step as ‘a masterstroke in political sagacity’. Decision to nationalise the banks, which has both political and economic undertones, has to be analysed by considering the then prevailing conditions. After centuries of foreign rule and economic exploitation, the independant India had just started its march towards socio-economic development with a dream of creating equitable society by alleviating the widespread poverty. India had adopted the path of planned economic development which envisaged social i.e. governmental control over the means of production. First two plans laid stress on creating heavy industries which would serve as base of economic development. From third plan major emphasis was given on agricultural development with the aim of achiving self-sufficiency in food production and thus tackle the grave issue of ... ... like Uttar Pradesh, Bihar, Orissa etc. After nationalisation the professional management made way for public maganemet which caused lower efficiency. As social welfare took precedance over profits many banks started suffering heavy losses. The political interference in daily administration of banks increased which led to rampant corruption. Although the banking habits in rural areas improved significantly menace of illigal moneylenders could not be curbed in large parts of India. In conclusion, it has be accepted that despite all the demerits the nationalisation of banks was a major step in towards the creation of equitable society. Public sector banks later went on to become catalyst in success of green revolution. In an agrarian economy, bringing banking system under public control was a major shot in the arm for the socialist government of Indira Gandhi.