According to the Banking Companies Act, 1970, the aim of nationalization of banks in India is “to control the heights of the economy and to meet progressively and serve better the needs of development of the economy in conformity with national policy and objectives.” 1. The elimination of concentration of economic power in the hands of a few 2. diversification of the flow of bank economic credit towards priority sectors such as agriculture, small industry and exports, weaker sections and backward areas 3. fostering of new classes of entrepreneurs, so as to create, sustain and accelerate economic growth 4. professionalisation of bank management
5. providing adequate training as well as reasonable terms of service to bank staff 6. extending banking facilities to unbanked rural areas and semi rural areas to mobilize savings of people to the largest possible extent and to utilize for productive purposes 7. to curb the use of bank credit for speculative and other unproductive purposes 8. to bring banks under the control of RBI
1. Accelerated branch expansion in rural and backward regions- in 1969 bank branches in rural areas accounted to only 22.5% of the total number of branches. Today branches in rural areas account to 52% 2. Deposit mobilization-after nationalization banks attract deposits from different sections by means of attractive deposit schemes 3. Finance to priority sectors- In 1969 the total credit given to priority sectors like agriculture, small industries and rural development was only 2% of total bank credit. By 2006-2007 in increased to around 40% of total credit 4. Increase in total transactions-the total deposits which was 4,664 crores in 1969 increased to 38.30 trillion 5. Differential rate of interest-to provide credit to weaker sections of the society at very low rate of interest, banks came out with Differential Rate of Interest scheme in 1972 6. Profit making-after nationalization, banks are making profits in addition to achieving economic and social objectives. 7. Safety-the government has given importance to safety of the banks. The RBI exercises tight control over banks and safeguards depositors interest 8. Developmental functions- after nationalization, banks provide assistance for the progress of agriculture, rural development, industry, trade and other developmental plans of the government 9. Advances under self-employment scheme-public sector banks play a significant role in promoting self employment through advances to unemployed through various schemes of the government like IRDP,JGSY, etc 4. What are the main functions of banks?
There are four types of banking services. They are as follows- 1) Central banking services.
2) Commercial banking services.
3) Specialized banking services.
4) Non-banking financial services.
The various functions of each of the following banks are-
Central banking services
The central bank of any country-
1) Issues currency and bank notes.
2) Discharges the treasury functions of the Government. 3) Manages the money affairs of the nation and regulates the internal and external value of money. 4) Acts as banker to the govt.
5) Acts as banker’s bank.
Commercial banking services
Commercial banking services include-
1) Receiving various types of deposits.
2) Lending various types of loans.
3) Extending some non-banking customer services like facilities of locker, rendering services in paying directly house rent, electricity bills, share calls, insurance premium etc
Specialized banking services
They are estd for definite specialized banking services like 1) Industrial banks to lend long term...