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By the 1960s, the Indian banking industry has become an important tool to facilitate then development of the Indian economy. It emerged as a large employer, and a debate has ensued about the possibility to nationalize the banking industry. Indira Gandhi, the-then Prime Minister of India expressed the intention of the GOI in the annual conference of the All India Congress Meeting in a paper entitled "Stray thoughts on Bank Click to edit Nationalisation. Master subtitle style Thereafter, her move was swift and sudden, and the GOI issued an ordinance and nationalised the 14 largest commercial banks with effect from the midnight of July 19, 1969.

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Within two weeks of the issue of the ordinance, the Parliament passed the Banking Companies (Acquisition and Transfer of Undertaking) Bill, and it received the presidential approval on 9th August, 1969. A second dose of nationalisation of 6 more commercial banks followed in 1980.

The stated reason for the nationalisation was to give the government more control of credit delivery. Click to edit Master subtitle style With the second dose of nationalisation, the GOI controlled around 91% of the banking business of India.

After this, until the 1990s, the nationalised banks grew at a pace of around 4%, closer to the average growth rate of the Indian economy.

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Banking in the sunshine of Government ownership gave the public implicit faith and immense confidence about the sustainability of these institutions. The central bank became the central player and increased its policies for a lot of tasks like interests, reserve ratio and visible deposits. The measures aimed at better economic development and had a huge effect on the company policy of the institutes. Click to edit Master subtitle style The banks lent money in selected sectors, like agri-business and small trade companies.

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Conversion from class banking to mass banking The branch was forced to establish two new offices in the country for every newly established office in a town. Branch expansion in rural and semi urban area The oil crises in 1973 resulted in increasing inflation, and the RBI restricted monetary policy to reduce the effects.[ Click to edit Master subtitle style

Functioning on the lines of social objective rather than commercial objective.

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The following are the steps taken by the Government of India to Regulate Banking Institutions in the Country: 1949 : Enactment of Banking Regulation Act. 1955 : Nationalisation of State Bank of India. 1959 : Nationalisation of SBI subsidiaries. 1961 : Insurance cover extended to deposits. 1969 : Nationalisation of 14 major banks. 1971 : Creation of credit guarantee corporation. 1975 : Creation of regional rural banks. Click to edit Master subtitle with deposits over 200 crore. 1980 : Nationalisation of seven banks style After the nationalisation of banks, the branches of the public sector bank India rose to approximately 800% in deposits and advances took a huge jump by 11,000%.