Nationalised Banks

Nationalised banks are commercial banks that are owned and controlled by the government of a country. They play a crucial role in the financial system of a country by providing various banking services to the public and contributing to economic development.

History of Nationalised Banks in India

The history of nationalised banks in India dates back to the post-independence era when the government of India decided to nationalise major commercial banks to ensure wider access to banking services, promote financial inclusion, and control the credit flow in the economy. The first wave of nationalisation occurred in 1969 when 14 major commercial banks were nationalised. Subsequently, in 1980, six more banks were nationalised, bringing the total number of nationalised banks in India to 20.

Objectives of Nationalised Banks

The primary objectives of nationalised banks in India include:

• Financial Inclusion: Nationalised banks aim to provide banking services to all segments of society, including the unbanked and underbanked population, by expanding their branch network and offering a range of financial products and services.

• Economic Development: Nationalised banks play a vital role in promoting economic development by providing credit to various sectors of the economy, such as agriculture, industry, and small businesses. They also support infrastructure development and social welfare programs.

• Social Welfare: Nationalised banks contribute to social welfare by offering various schemes and services that benefit the weaker sections of society, such as priority sector lending, microfinance, and rural development programs.

Functions of Nationalised Banks

Nationalised banks perform a wide range of functions, including:

• Accepting Deposits: Nationalised banks accept various types of deposits from the public, such as savings deposits, current deposits, and fixed deposits, to mobilise funds for lending.

• Lending: Nationalised banks provide loans and advances to individuals, businesses, and other entities for various purposes, such as personal loans, housing loans, business loans, and agricultural loans.

• Remittances: Nationalised banks facilitate the transfer of funds within the country and abroad through various channels, such as NEFT, RTGS, and IMPS.

• Investment Services: Nationalised banks offer investment products and services, such as mutual funds, government bonds, and insurance policies, to help customers grow their wealth.

• Other Services: Nationalised banks also provide a range of other services, including ATM services, debit cards, credit cards, internet banking, and mobile banking, to enhance customer convenience.

Challenges Faced by Nationalised Banks

Nationalised banks in India face several challenges, including:

• Competition: Nationalised banks face intense competition from private sector banks, foreign banks, and non-banking financial institutions, which offer innovative products and services.

• Non-Performing Assets (NPAs): Nationalised banks are burdened with a high level of NPAs, which can impact their profitability and financial stability.

• Technological Advancements: Nationalised banks need to keep pace with technological advancements and invest in digital infrastructure to meet the evolving needs of customers.

• Government Interference: Nationalised banks may face political interference and policy changes that can affect their operations and decision-making.

Conclusion

Nationalised banks play a vital role in the Indian financial system by providing banking services to a large segment of the population and contributing to economic development. However, they face several challenges, and their success depends on their ability to adapt to changing market conditions, embrace technology, and maintain financial stability.