Topic 03 of 6 · Chapter 05 · Indian Economy
Types of Banks & Bank Nationalisation
Commercial banks, cooperative banks, RRBs, payment banks, small finance banks, and bank nationalisation (1969, 1980).
📋 In This Article
1. Types of Banks in India
| Type | Description | Examples |
|---|---|---|
| Scheduled Commercial Banks | Banks listed in 2nd Schedule of RBI Act; must maintain CRR with RBI | SBI, HDFC Bank, ICICI Bank, PNB |
| Public Sector Banks | Government holds majority stake (>51%) | SBI, PNB, Bank of Baroda, Canara Bank |
| Private Sector Banks | Private individuals/companies hold majority stake | HDFC Bank, ICICI Bank, Axis Bank, Kotak |
| Foreign Banks | Banks incorporated abroad with branches in India | Citibank, HSBC, Standard Chartered, DBS |
| Regional Rural Banks (RRBs) | Set up to serve rural areas; joint ownership of Centre (50%), State (15%), Sponsor Bank (35%) | Andhra Pradesh Grameena Vikas Bank |
| Cooperative Banks | Owned by members; serve agricultural and rural credit needs | PACS, District Central Cooperative Banks |
| Payment Banks | Can accept deposits up to ₹2 lakh; cannot give loans | Paytm Payments Bank, India Post Payments Bank |
| Small Finance Banks | Serve unserved/underserved sections; can give loans | AU Small Finance Bank, Ujjivan SFB |
2. Bank Nationalisation (1969 & 1980)
India nationalised commercial banks in two phases:
- First Nationalisation (July 19, 1969): 14 major commercial banks nationalised by PM Indira Gandhi. Banks with deposits of ₹50 crore or more were nationalised.
- Second Nationalisation (April 15, 1980): 6 more banks nationalised. Banks with deposits of ₹200 crore or more.
⭐ Why Nationalisation? Before 1969, banks were controlled by big industrialists who used them to finance their own businesses. Small farmers, artisans, and small businesses couldn’t get loans. Nationalisation was meant to direct credit to priority sectors — agriculture, small industries, weaker sections.
💡 Indira Gandhi’s Slogan: Bank nationalisation was part of Indira Gandhi’s “Garibi Hatao” (Remove Poverty) programme. She called it “social control of banks.”
3. New Types of Banks (Post-2014)
- Payment Banks (2015): Can accept deposits up to ₹2 lakh per customer. Cannot give loans or credit cards. Focus on financial inclusion through mobile banking. Examples: Paytm Payments Bank, India Post Payments Bank, Airtel Payments Bank.
- Small Finance Banks (2015): Can accept deposits and give loans. Focus on unserved/underserved sections — small farmers, micro industries, unorganised sector. Examples: AU Small Finance Bank, Ujjivan SFB, Equitas SFB.
4. Key Points for Exam
🔑 Must-Remember Facts
- First bank nationalisation: July 19, 1969 — 14 banks (PM Indira Gandhi)
- Second bank nationalisation: April 15, 1980 — 6 banks
- Total banks nationalised: 20 banks
- RRBs: Centre (50%) + State (15%) + Sponsor Bank (35%)
- Payment Banks: deposits up to ₹2 lakh; cannot give loans
- Small Finance Banks: can accept deposits AND give loans
- Largest public sector bank: State Bank of India (SBI)
- Largest private sector bank: HDFC Bank
- NABARD supervises: RRBs and cooperative banks
- Scheduled banks must maintain CRR with RBI