From Nationalization to Restructuring

An important step towards Public sector banking was taken in July, 1969, when 14 banks with a deposit base of Rs. 50 crore or more, were Nationalized. The second phase, of nationalization was carried out in 1980 with six more private banks. These steps brought 91% of the banking segment in India under Government Ownership.

One of the main objectives of nationalization of the banks has been to help achieving the balanced regional sectorial and sectional development of the economy by way of making the banks to reach out of the small man and to the remote area of the country. Students of Rakshpal Bahadur Management Institution, Bareilly [RBMI] having opinion that Countries like India, where we have a Urban-Rural divide, it was necessary for banks to go in the rural areas where sector such as agriculture, small & village industries were in need of funds for their expansion and further economic development.

Another benefit of nationalization of banks provided the GoI more control of credit delivery. Students of Rakshpal Bahadur Management Institute, Bareilly [RBMI] in a group discussion conclude that In India, the agriculture sector and its allied activities were the largest contributor to the national income. Thus, these were labeled as the priority sector. But, unfortunately, they were deprived of their due share in the credit. Nationalization was urgently needed for catering funds to them.

From the major breakthrough of nationalization, in context of ensuring financial safety, soundness, and solvency of banks, and to promote a diversified, efficient and competitive financial system, recently another milestone was set by the GoI of announcing the merger of 10 state-run banks into 4-large entities.

Following the consolidation, the country will leave with 12 public sector banks, instead of 18 at present.

 Oriental Bank of Commerce & United Bank will merge into Punjab National Bank to create a bank with Rs. 17.95 lakhs crore Business and 11437 branches.

 Merger of Syndicate Bank with Canara Bank will create the fourth largest public sector bank with Rs.15.20 lakhs crore business and 10324 branches.

 Andhra Bank & corporation Bank’s merger with Union Bank of India will create India’s fifth largest public sector bank with business of Rs. 14.59 lakhs crore and 9609 branches.

 Allahabad Bank with Indian Bank will create business of 8.81 lakhs crore with strong branch network in South, North and East of the country.

The students and faculty members of Rakshpal Bahadur Management Institution, Bareilly [RBMI] welcomes the step taken by the GoI and looks forward for the positive impacts on our Economy of these reforms and mergers.

Nitin Agarwal (Assistant Professor, RBMI-Bareilly)