Nationalised Banks in India

Here is the list of the 12 Nationalised banks: 

1. Bank of Baroda 

1. Bank of India 

1. Bank of Maharashtra 

1. Canara Bank (With Merger of Syndicate Bank) 

1. Central Bank of India 

1. Indian Bank (With Merger of Allahabad Bank) 

1. Indian Overseas Bank 

1. Punjab & Sind Bank 

1. Punjab National Bank (With Merger of Oriental Bank of Commerce and United Bank of India) 

1. State Bank of India 

1. UCO Bank 

1. Union Bank of India (With the Merger of Andhra Bank and Corporation Bank) 

Difference Between Nationalised and Private Banks

Brief History of Nationalised Banks in India  

 1. Bank of Baroda (BOB): BOB, headquartered in Vadodara, Gujarat, is among India's largest public sector banks. It holds the position of the second-largest public sector bank in India, serving 153 million customers. With a global footprint comprising 100 overseas offices, BOB traces its origins back to 1908 when it was founded by Maharaja Sayajirao Gaekwad III. Starting with a branch in Ahmedabad, BOB expanded both nationally and internationally. Its international operations commenced in 1953 with branches in Kenya and Uganda, followed by London in 1957.

Through the 1960s and 1970s, BOB continued to grow by acquiring several banks in India and abroad. In 1969, it was nationalised along with other major Indian banks. In the subsequent decades of the 1980s and 1990s, BOB further expanded its international presence by establishing branches in locations such as Bahrain, Oman, and Brussels, among others. It also ventured into joint ventures and subsidiaries in various countries, including Hong Kong and New York. Recent history saw BOB's merger with Dena Bank and Vijaya Bank in 2019, propelling it to become the third-largest bank in India by business size. BOB also has subsidiaries operating in various financial sectors, including BOB Capital Markets, Nainital Bank, and IndiaFirst Life Insurance Company. 

2. Bank of India (BOI): A major Indian public sector bank with its headquarters in Mumbai, BOI, which was founded in 1906, became government-owned in 1969. BOI holds the distinction of being a founding member of SWIFT, facilitating efficient financial processing and communication services. Initially established in 1906 to address community-specific banking needs, BOI experienced rapid growth.

The bank operates through a vast network comprising over 5,084 branches across India, managed via 54 zonal offices. Additionally, BOI extends its reach with 60 branches, 5 subsidiaries, and 1 joint venture abroad. Venturing into international markets, BOI opened its first overseas branch in London in 1946 and expanded to other locations including Tokyo, Singapore, Kenya, and Uganda. Despite facing nationalizations in several countries, such as Tanzania and Yemen, BOI continued its expansion efforts by acquiring and establishing branches worldwide. The bank strategically entered into representative offices and subsidiaries, further solidifying its global presence. With a rich history spanning over a century, BOI remains a significant player in India's banking sector, offering a wide array of financial services both domestically and internationally. 

3. Bank of Maharashtra: Headquartered in Pune, Bank of Maharashtra is an Indian public sector bank with a substantial nationwide presence. As of March 2022, it served 29 million customers through its network of 2,022 branches, making it the nationalised bank with the most extensive branch network in the state of Maharashtra. In the fiscal year 2022-23, this state-owned bank based in Pune achieved remarkable performance metrics. Historically, Bank of Maharashtra was established by V.G. Kale and D. K. Sathe in Pune. The bank played a pivotal role in providing financial support to small businesses and nurturing various industrial enterprises. In 1969, the bank underwent nationalization. 

4. Canara Bank: Canara Bank, headquartered in Bangalore, India, is a prominent Indian public sector bank. Founded in 1906 in Mangalore by Ammembal Subba Rao Pai, the bank later underwent nationalization in 1969. Canara Bank extends its operations internationally with offices in London, Dubai, and New York. Historically, the bank's journey began with the establishment of the Canara Hindu Permanent Fund by philanthropist Ammembal Subba Rao Pai on 1 July 1906, in Mangalore.

Canara Bank expanded through acquisitions, notably taking over Bank of Kerala in 1961 and Seasia Midland Bank (Alleppey) in 1961. In 1961, it also acquired G. Raghumathmul Bank in Hyderabad. In 1985, Canara Bank acquired Lakshmi Commercial Bank as part of a rescue operation. Canara Bank made history in 1996 by becoming the first Indian bank to receive ISO certification for ‘Total Branch Banking’ for its Seshadripuram branch in Bangalore. The bank later discontinued the practice of obtaining ISO certification for its branches. On 30 August 2019, it was announced that Syndicate Bank would merge with Canara Bank. Canara Bank has also expanded internationally through subsidiaries, branches, and offices, with its international division established in 1976. Subsidiary companies and regional rural banks are part of Canara Bank's diverse portfolio. Canara Bank actively participates in development projects and offers a Unified Payment Interface (UPI) app named ‘empower’ to facilitate transactions. 

5. Central Bank of India (CBI): Based in Mumbai, Central Bank of India is an Indian public sector bank, distinct from the country's central bank, the Reserve Bank of India. Established in 1911 by Sir Sorabji Pochkhanawala and chaired by Sir Pherozeshah Mehta, it holds the distinction of being India's first commercial bank entirely owned and managed by Indians. In the early 20th century, it expanded its presence with branches in Hyderabad and Secunderabad. CBI also acquired Tata Industrial Bank in 1923. During the 1930s, it played a significant role in establishing the Central Exchange Bank of India in London, although this entity was later acquired by Barclays. Post-World War II, CBI faced nationalization in Burma in 1963 and in India in 1969. The bank ventured into credit card issuance in 1980 and marked its 108th Foundation day with the introduction of ‘MEDHA,’ a robotic banking initiative. 

6. Indian Bank: Established in 1907 and with headquarters in Chennai, Indian Bank is a public sector bank serving over 100 million customers through its network of 5,814 branches, 4,929 ATMs. The bank holds ISO27001:2013 certification for its information systems and security processes. Indian Bank operates overseas branches in Colombo and Singapore, along with Foreign Currency Banking Units.

It has established correspondent relationships with 227 overseas banks in 75 countries. After nationalization in 1969, Indian Bank merged with several regional banks, expanded internationally, and played a vital role in the banking industry. In 2020, it merged with Allahabad Bank, becoming the seventh-largest public sector bank in India. 

7. Indian Overseas Bank (IOB): Headquartered in Chennai, Indian Overseas Bank is a public sector bank with over 3,220 domestic branches, 4 foreign branches, and representative offices. Founded in 1937, it specializes in foreign exchange and overseas banking. During the nationalization of banks in 1969, IOB was among the 14 major banks taken over by the Indian government. IOB has garnered recognition for its digital payment transactions. It boasts a rich history of international expansion, mergers, and milestones, including being one of the pioneers in offering mobile banking services and launching applications like m Passbook.

8. Punjab & Sind Bank: With Headquarters in New Delhi, Punjab & Sind Bank is an Indian public sector bank with 1,553 branches, including 635 in Punjab, and 25 zonal offices across India. Founded in 1908 by Bhai Vir Singh, Sir Sunder Singh Majitha, and Sardar Tarlochan Singh to serve the Punjab and Sind regions, it was nationalised by the Indian government in 1980. During the 1960s, the bank established a branch in London, which was later acquired by Bank of Baroda in 1991. Despite challenges, the bank has demonstrated significant growth since 2004 and went public with an oversubscribed IPO. 

9. Punjab National Bank (PNB): A prominent Indian public sector bank headquarters in New Delhi, Punjab National Bank was established in May 1894. It ranks as the second-largest public sector bank in India based on business volumes and network, serving over 180 million customers through 12,248 branches and 13,000+ ATMs. PNB operates internationally with branches in the UK, Hong Kong, Kowloon, Dubai, Kabul, and representative offices in several countries. The bank's foundation involved leaders from various backgrounds and aligned with the Swadeshi movement's objectives. Over the years, it has experienced significant growth and expansion, including mergers and acquisitions. In 2020, PNB became the second-largest public sector bank in India following its merger with Oriental Bank of Commerce and United Bank of India. PNB also offers WhatsApp banking services, providing non-financial and informative services 24/7. 

10. State Bank of India (SBI): India's largest public sector bank, SBI, is headquartered in Mumbai, Maharashtra. Globally, it ranks 48th in total assets and was the sole Indian bank listed in the 2020 Fortune Global 500, securing the 221st place. SBI's roots trace back to the 19th century as the Bank of Calcutta and later the Bank of Bengal. Through mergers, it evolved into the State Bank of India in 1955. The bank boasts a significant international presence, operating in 36 countries through subsidiaries, branches, and offices. SBI offers a wide range of banking products and services via its extensive network of over 24,000 domestic branches, with a strong emphasis on financial inclusion. It has embraced digital banking through the YONO digital platform, and Dinesh Kumar Khara serves as the Chairperson of the State Bank of India. 

11. UCO Bank: Formerly known as United Commercial Bank, UCO Bank is an Indian public sector bank established in Kolkata in 1943. As of FY 2020–21, it had a total business volume of Rs.3.24 lakh crore and ranked 80th on the Fortune India 500 list based on 2020 data. UCO Bank's history involves notable figures like Ghanshyam Das Birla, an industrialist who played a pivotal role in its establishment. It commenced operations with an issued capital of Rs.2 crores, with Rs.1 crore paid up, and opened 14 branches across India. After World War II, it expanded overseas, with branches in Rangoon, Singapore, Hong Kong, London, and Malaysia. In 1969, the Indian government. 

12. Union Bank of India: Union Bank of India, also known as UBI, is a prominent Indian public sector bank headquartered in Mumbai. With over 120 million customers -it stands as one of India's largest PSU banks following its merger with Corporation Bank and Andhra Bank on 1 April 2020. UBI operates an extensive network of over 8,700 branches, including overseas branches in Hong Kong, Dubai, Antwerp, and Sydney, alongside representative offices in Shanghai, Beijing, and Abu Dhabi. The bank also reaches customers in the United Kingdom through its subsidiary, Union Bank of India (UK). UBI ensures accessibility with a vast network of over 11,100 ATMs and 15,300 Business Correspondent Points, all managed by a dedicated workforce of over 75,000 employees. Established in 1919 in Bombay (now Mumbai), UBI steadily expanded its presence, becoming the fifth-largest public sector bank in India with 9,609 branches after nationalization in 1969 and subsequent mergers and acquisitions. 

Reasons Behind the Nationalization of Banks in India

Bank nationalization is a policy decision made by governments with specific objectives in mind. This measure involves transferring the ownership and control of banks from private entities to the government. On 19 July 1969, this act came into effect with the aim ‘to better satisfy the needs of economic development in compliance with national policy objectives.’ The Banking Companies (Acquisition and Transfer of Undertakings) Act of 1970 facilitated the nationalization of banks.

While it was a significant policy tool, it has lost favor with governments following the liberalization of the Indian economy in 1991. The Nariman Committee on banking reforms in 1991 and 1998 recommended the expansion of private banks in India. More recent government reports and documents have advocated for the existence of two nationalised banks of global stature. However, it's essential to understand the reasons behind bank nationalization.  

1. Financial Inclusion of Masses: One of the primary reasons for bank nationalization was to ensure that banking services reached a larger section of the population, particularly in rural areas. By bringing banks under government control, it was believed that the government could steer them to open branches in remote and underserved regions, thereby promoting financial inclusion and empowering the masses. 
2. Promotion of Rapid Growth: Nationalization aimed to stimulate rapid growth in crucial sectors like agriculture and small industries. By directing credit and resources towards these sectors, the government intended to boost agricultural production, create jobs, and foster economic development. Additionally, it was seen as a means to encourage new entrepreneurs to enter the market. 
3. Discouraging Crony Capitalization: Nationalization was also a response to concerns about crony capitalism. By bringing banks under government control, it was expected that loans and resources would be allocated more fairly and transparently, reducing the influence of powerful business interests over the banking sector. 
4. Ensuring Prudent Lending and Better Management: Nationalization aimed to ensure that banks followed sound lending practices and were managed efficiently. Government oversight and control were expected to lead to more responsible lending decisions, reducing the risk of financial crises. 

Advantages of Nationalised Banks in India

Public sector banks, often referred to as government banks, offer several advantages that benefit both customers and the nation as a whole: 

1. Competitive Interest Rates on Deposits: Public sector banks typically provide depositors with attractive interest rates on their savings and fixed deposits. This encourages people to save and earn a reasonable return on their savings. 
2. Low-Interest Rate Loans: Government banks offer loans at competitive interest rates, making it affordable for individuals, businesses, and entrepreneurs to access credit. This helps stimulate economic growth and development. 
3. Wide Customer Reach: Public sector banks have a substantial customer base, allowing them to serve a diverse range of customers, including individuals, small businesses, and large corporations. This widespread customer reach contributes to the financial inclusion of various segments of society. 
4. Rural Banking Services: Government banks play a crucial role in providing banking services to rural and underserved areas. They establish branches in remote regions, helping rural populations access banking facilities, credit, and financial services, thereby promoting rural development. 

1. Extensive Branch Network: Public sector banks typically maintain an extensive network of branches across the country. This network ensures that banking services are accessible to people in both urban and rural areas, contributing to the economic growth and stability of the nation. 
2. Job Security for Employees: Employees working in public sector banks enjoy a high level of job security. This stability is important for the livelihoods and well-being of bank staff and their families.  
3. Pension Benefits: Public sector bank employees are eligible for pension benefits upon retirement. This ensures financial security and a source of income for retired employees, contributing to their well-being in their post-employment years. 

Disadvantages of Nationalised Banks in India

Public sector banks, while offering certain advantages, also have their share of disadvantages: 

1. Service Complaints: Many customers have voiced complaints about unsatisfactory service provided by staff in some public sector banks. These complaints may range from delays in processing transactions to irresponsiveness to customer inquiries. 
2. Corruption Scandals: Several major corruption scandals have tainted the reputation of public sector banks. These scandals can erode public trust and confidence in the banking sector and the government's oversight of these institutions. 
3. High Default Rates: Public sector banks often face higher rates of customer loan defaults compared to their private sector counterparts. This can result in a significant burden of non-performing assets (NPAs), affecting the bank's profitability and financial stability. 
4. Costly Financial Activities: Public sector banks may spend a substantial amount of money on various financial activities, including compliance, paperwork, and administrative overhead. This expenditure can reduce their efficiency and profitability. 
5. Bureaucratic Structure: Public sector banks often have a substantial bureaucratic structure at the managerial level. This can lead to slow decision-making processes and hinder the bank's ability to adapt quickly to changing market conditions and customer needs. 

1. Slow Decision-Making: Due to the bureaucratic nature of public sector banks, they may struggle to make significant financial decisions swiftly. This can be a drawback in a dynamic and rapidly evolving financial environment where timely decisions are crucial. 
2. Limited Individualized Service: Public sector banks may provide less personalized or individualized service to customers compared to private sector banks. Customers may feel that their specific needs and preferences are not adequately addressed. 

Role of Payment Banks in Indian Banking System

In addition to the traditional banking institutions in India, Payment Banks represent a novel banking model introduced and regulated by the Reserve Bank of India (RBI). These specialized banks are unique in that they are not authorized to issue credit. Instead, their primary focus lies in facilitating digital transactions and providing basic banking services. Payment Banks are allowed to accept restricted deposits, currently limited to Rs.200,000 per customer, with the potential for this limit to be increased in the future. However, they are prohibited from offering loans or credit card services. Payment Banks are permitted to operate both current accounts and savings accounts. 

These Payment Banks play a significant role in promoting digital financial inclusion and offering essential banking services to a wide range of customers in India. 

Here is a list of Payment Banks in India: