Page 25 - Banking Finance May 2020

ARTICLE

PUBLIC

SECTOR

BANKS

DESERVE

RESPECT

"The resources of the financial system are held by share, i.e., 51% or more, is held by the Government. As of
financial institutions in trust and have to be now, after merger, there are 12 Public Sector Banks in India.
deployed for the maximum benefit of their owners' The History of modern banking in India started in 1955
when the Imperial Bank of India was transformed into the
viz., depositors and investors. The safety of their
State Bank of India. This was the first time that the Central
funds should be the primary concern of banks and
Government entered into the banking business. Seven other
regulatory authorities and ensuring solvency,
state banks became the subsidiaries to State Bank of India,
health and efficiency of the institutions should, with the passing of State Bank of India Subsidiaries Banks
therefore, be central to effective financial reform." Act in 1959. In 1969, 14 major Banks with deposits of more
-Report of the committee on Financial Reform, than Rs.50 crores were nationalised and in 1980 the
1991 (Narsimham Committee) Government took over six other commercial banks.

Introduction: The indigenous banks, prior to nationalisation, were unable
to meet the demands of the general public. They were
Public Sector Banks (PSB) are banks where the majority
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
State Bank Institute of Consumer Banking and asked banks to follow accounting standards and submit
Hyderabad periodical statements of their affairs. RBI also offered them
privileges enjoyed by the scheduled banks. The indigenous

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