Why was the nationalization of banks an important point in banking history?

         Until the 1960s, all banks except the State Bank of India remained under the ownership and management of private persons. By then, banks had become an important tool for the development of economy.

         In a sudden and unexpected move that marked a major change in our history, the then Prime Minister Indira Gandhi announced the nationalization of 14 commercial banks with effect from the midnight of July 19th, 1969. These were the banks that managed around 85 per cent of the country’s deposits.

         One of the biggest changes caused by nationalization was equipping banks to work for social welfare. Sensitive sectors like agriculture and rural industries were greatly benefitted by the move.

          Nationalization helped improve the public’s confidence in banking. Altogether nationalization strengthened India’s banking network.

         The second phase of nationalization took place in 1980, when six more commercial banks were nationalized.