Question

Which of the following banks was Nationalized in 1969?
1. Andhra Bank
2. Punjab and Sindh Bank
3. Vijaya Bank
4. Canara Bank

Answer 1

Correct Answer - Option 4 : Canara Bank

The Correct answer is Canara Bank.

• After independence, the Government of India (GOI) adopted 'planned economic development' for the country.
• Nationalisation was in accordance with the national policy of adopting the socialistic pattern of society. Nationalization came at the end of a troubled decade. India had suffered many economic as well as political shocks.
• There were two wars (with China in 1962 and Pakistan in 1965) that put immense pressure on public finances. Two successive years of drought had not only led to food shortages but also compromised national security because of the dependence on American food shipments (PL 480 program). Subsequently, a three-year plan holiday affected aggregate demand as public investment was reduced.
• The decade of 1960 - the 70s was the lost decade for India as the economic growth barely outpaced population growth and average incomes stagnated.
  Industry’s share in credit disbursed by commercial banks almost doubled between 1951 and 1968, from 34% to 68% whereas agriculture received less than 2% of total credit.
• Agriculture needed a capital infusion, with the initiation of the Green Revolution in India that aimed to make the country self-sufficient in food security
• Other reasons responsible for the nationalization of banks were-

1. Social welfare
2. Controlling private monopolies
3. Expansion of banking to rural areas
4. Reducing regional imbalance to curb the urban-rural divide
5. Priority Sector Lending: In India, the agriculture sector and its allied activities were the largest contributors to the national income.
6. Mobilization of savings: Nationalisation aimed at mobilizing the savings of the people to the largest possible extent and utilizing them for productive purposes.

Bank Nationalisation took place in two phases, in the first phase i.e.(19 July 1969), 14 banks were nationalised while in the second phase (1980) 6 banks nationalised

• List of banks nationalised in 1969

1. Allahabad Bank (now Indian Bank)
2. Bank of Baroda
3. Bank of India
4. Bank of Maharashtra
5. Central Bank of India
6. Canara Bank
7. Dena Bank (now Bank of Baroda)
8. Indian Bank
9. Indian Overseas Bank
10. Punjab National Bank
11. Syndicate Bank (now Canara Bank)
12. UCO Bank
13. Union Bank of India
14. United Bank of India( now Punjab National Bank)

• Banks nationalised in 1980

1. Punjab and Sind Bank
2. Vijaya Bank (Now Bank of Baroda)
3. Oriental Bank of India (now Punjab National Bank)
4. Corporation Bank (now Union Bank of India)
5. Andhra Bank (now Union Bank of India)
6. New Bank of India (now Punjab National Bank)