Q.What is meant by nationalization of commercial banks? State the main objectives of bank nationalization in India.

Nationalization means transferring privately owned banks to government ownership and control, done in India chiefly in 1969 and 1980. …

Meaning. Nationalization of commercial banks means the transfer of the ownership and control of privately owned banks to the government. In India this was done in two major steps — a first group of large banks was taken over in 1969 and a second group in 1980 — so that the greater part of the banking system passed into public ownership. Before this, most large banks were privately owned and were felt to serve mainly big industry and trade in the towns, while neglecting agriculture, small industry and the rural poor.

Main objectives of nationalization:

1. To break the concentration of economic power — private banks were felt to favour a few large industrial houses, often linked to the banks' own owners.
2. To extend banking to rural and neglected areas — to open branches where none existed and bring banking to villages and small towns.
3. To direct credit to priority sectors — agriculture, small-scale industry, small traders, artisans and weaker sections, previously ignored.
4. To mobilise savings on a larger scale and channel them into planned economic development.
5. To promote balanced regional development rather than concentration in a few prosperous regions.
6. To make banking an instrument of social and economic policy in line with the country's plans. …

Do not confuse nationalization (government takeover of existing private banks) with the mere setting up of new government banks. Also state the objectives as s …