From the Imperial Bank to nationalised banks
How India's banks passed into public hands: first the , then the Imperial Bank, then two rounds of takeovers.
What the paper can ask
- The Reserve Bank was taken into public ownership under the Reserve Bank of India (Transfer to Public Ownership) Act, before the Imperial Bank changed hands.
- The All-India Rural Credit Survey Committee recommended a state-partnered bank for rural India; that led to the State Bank of India taking over the Imperial Bank's undertaking.
- The July 1969 nationalisation took effect at midnight on 19 July and covered the biggest banks; six more banks followed in 1980.
- From 1 April 2017 the five SBI associate banks and Bharatiya Mahila Bank merged into SBI; in 2019-20 Dena and Vijaya joined Bank of Baroda, OBC and United joined PNB, Syndicate joined Canara, Andhra and Corporation joined Union, and Allahabad joined Indian Bank.
Why exams ask
Setters ask the year the Imperial Bank became SBI, how many banks were nationalised in 1969 and 1980, and which banks merged into which.
The full story
At independence most Indian banks were private. The RBI was nationalised soon after independence. On the advice of the All-India Rural Credit Survey Committee, the Imperial Bank of India was taken over and renamed the State Bank of India so that banking could reach villages and district towns. Indira Gandhi then nationalised the largest commercial banks in July 1969 and six more in 1980.
Test yourself
1.The Reserve Bank of India began operations on 1 April 1935 and was nationalised in:
Correct. Set up as a shareholders' bank on the Hilton Young Commission's recommendation, the RBI was nationalised on 1 January 1949.
Not quite. Set up as a shareholders' bank on the Hilton Young Commission's recommendation, the RBI was nationalised on 1 January 1949. It goes into your error book.
2.The Imperial Bank of India was converted into the State Bank of India in:
Correct. Under the State Bank of India Act 1955, the Imperial Bank became SBI on 1 July 1955 to extend banking to rural areas.
Not quite. Under the State Bank of India Act 1955, the Imperial Bank became SBI on 1 July 1955 to extend banking to rural areas. It goes into your error book.
3.How many major commercial banks were nationalised on 19 July 1969?
Correct. Fourteen banks with deposits above Rs 50 crore were nationalised in 1969 under Indira Gandhi; six more followed in 1980.
Not quite. Fourteen banks with deposits above Rs 50 crore were nationalised in 1969 under Indira Gandhi; six more followed in 1980. It goes into your error book.