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Question

In 1969, fourteen commercial banks with deposits over Rs.50 Cr were nationalised.  Which of the following was not one of the reasons for nationalisation of the banks? 

A Removal of control of the few over banking Correct Answer Incorrect Answer
B Flow of credit towards agriculture, small industry and export Correct Answer Incorrect Answer
C Professional management of banks Correct Answer Incorrect Answer
D Encouragement of new class of entrepreneurship Correct Answer Incorrect Answer
E All of the above were reasons for the nationalisation Correct Answer Incorrect Answer

Solution

The Government of India issued an ordinance and nationalised the 14 largest commercial banks with effect from the midnight of 19 July 1969. These banks contained 85 percent of bank deposits in the country. 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. With the second dose of nationalisation, the Government of India controlled around 91% of the banking business of India.

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