Say goodbye to the public sector! These 14 Indian commercial banks were nationalized today in 1969

On July 19, 1969, then Indian Prime Minister Indira Gandhi addressed the nation at 8:30 p.m. and announced the nationalization of 14 Indian commercial banks, which controlled over 85% of bank deposits in the country. The banks shortlisted for nationalization were Bank of India, Bank of Baroda, Central Bank of India, Canara Bank, Punjab National Bank, United Bank of India and Allahabad Bank.

The argument made by the government during this infuriating step was that the banks were not serving the interests of farmers, the agricultural credit line, focusing on small industries and start-ups. The government pre-selected the banks on the basis of the social capital reserve. Banks with capital of 50 Cr or more in the account were selected for nationalization.

The decision of then Indira Gandhi is considered a masterstroke, although its economic benefits remain debatable. Along with Indira Gandhi, Principal Secretary PN Haksar, Economist PN Dhar and KN Raj backed the sweeping decision. CNBCTV18.

The head of the Finance Ministry’s banking division, through his biography ‘No Regrets’, says he rushed to work after receiving a phone call on July 17 at midnight from Haskar to be part of a team who writes the prescription in 24 hours. The rush to draft the order within 24 hours was done so that Acting President VV Giri could sign it a day before making the notification public.

Intervention of the Supreme Court

Many banks have been affected, dragging this decision to court. On February 10, 1970, the Supreme Court found the law passed to be “void” and “discriminatory” against these 14 banks and declared that the compensation paid to the banks was not fair.

The government then rushed to prepare a new ordinance which was published on 14 February and which was later replaced by the Banking Companies (Acquisition and Transfer of Businesses) Act 1970.

After the decision to make banks a unit of the public sector, Indira Gandhi may have become a villain for the banks involved, but in the aftermath it has cemented her as a champion of struggling farmers and entrepreneurs across India. The process of nationalizing banks continued throughout her tenure as in 1980 she nationalized six more commercial banks.

Also Read: Remembering Mangal Pandey, Hero of the First War of Independence Who Inspired the 1857 ‘Sepoy Mutiny’ Revolt

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