Page 43 - Banking Finance April 2020

ARTICLE

PUBLIC SECTOR

BANKS

DESERVE

RESPECT

"The resources of the financial system are held by Government. As of now, after merger, there are 12 Public
financial institutions in trust and have to be Sector Banks in India. The History of modern banking in India
deployed for the maximum benefit of their owners' started in 1955 when the Imperial Bank of India was
transformed into the State Bank of India. This was the first
viz., depositors and investors. The safety of their
time that the Central Government entered into the banking
funds should be the primary concern of banks and
business. Seven other state banks became the subsidiaries
regulatory authorities and ensuring solvency, to State Bank of India, with the passing of State Bank of
health and efficiency of the institutions should, India Subsidiaries Banks Act in 1959. In 1969, 14 major Banks
therefore, be central to effective financial reform." with deposits of more than Rs.50 crores were nationalised
-Report of the committee on Financial Reform, and in 1980 the Government took over six other commercial
1991 (Narsimham Committee) banks.

The indigenous banks, prior to nationalisation, were unable
Introduction: Public Sector Banks (PSB) are banks where the
to meet the demands of the general public. They were
majority share, i.e., 51% or more, is held by the
mainly confined to big cities like Mumbai, Chennai, Kolkata,
Kanpur, Delhi etc. They were not able to cater to the
About the author demands of small farmers and small businessmen. They were

only financing large corporate houses. In the 1930s, the
Abhishek Singh Reserve Bank of India (RBI) suggested a few banking reforms
Research Officer and asked banks to follow accounting standards and submit
State bank Institute of Consumer
Banking periodical statements of their affairs. RBI also offered them
privileges enjoyed by the scheduled banks. The indigenous

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