Is SBI a nationalized bank ?

People often get confused about whether SBI is a nationalized bank or not. This question has been asked quite often in various interviews. When one of our readers posted a similar question on our Facebook page, we thought of explaining this in detail here in our blog.

SBI is NOT a Nationalized bank. It is a Public Sector Bank. Actually, SBI draws power from State Bank of India Act, 1955. Nationalized banks are the banks which were nationalized in two phases – in 1969 and 1980. These banks were established under Banking Companies (Acquisition and Transfer of Undertakings) Acts, 1970 and 1980. So, these banks are governed by their respective statutes. In 1969, 14 Commercial banks were nationalized and in 1980, 6 more banks were nationalized. But, later in 1993, PNB and New India bank got merged taking the figure of nationalized banks to 19.

Now, couple of interesting question comes to our mind while we talk about nationalization of Banks, we’ll try and answer these questions.

1)      Why Nationalization of Banks was done by the Government?

  •  To raise public confidence in Banking system
  •  Expansion of banking facilities in a uniform manner
  •  Provide banking facility in rural and sub-urban areas
  •  Sought to end the monopoly control of big industrialists upon the banking system
  •  Aimed at giving more credit to priority sectors
  •  To reduce regional economic inequalities
  •  To ensure enough development funds for the planned growth of the country

2)      Why SBI was not nationalized during the waves of Nationalization of Banks in 1969 and 1980?

SBI was already under State control in 1969/1980, vide SBI Act, 1955. So, there was no need of Nationalization of State Bank of India. Banks which were nationalized in 1969/1980 were either owned by private business groups or individual investors.

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