Previous Year Question

In 1969, the Government of India nationalised 14 major private-sector banks. According to the official historical account of the Reserve Bank of India, 14 private-sector banks were nationalised in 1969, followed by the nationalisation of 6 more private-sector banks in 1980.

This nationalisation, associated with 19 July 1969, was an important banking reform. One of its major objectives was to extend banking and credit facilities beyond large industries and urban centres to agriculture, small industries, weaker sections and rural areas. According to RBI, in 1967 agriculture accounted for only 2.2% of the total advances of Scheduled Commercial Banks, whereas industry accounted for 64.3%.

Banking access in India was also very limited at the time of nationalisation. RBI's historical account states that out of about 600,000 villages, only around 5,000 had banks. Therefore, after nationalisation, branch expansion and increased priority-sector lending became important elements of Indian banking policy.

For examination purposes, remember the key fact: 1969 = 14 banks; 1980 = 6 banks.