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Unit 1: Indian Banking System

Banks are a medium through which economic and fiscal policies of the government are Notes
materialized. They are the heart of the financial system.

Figure 1.1: Business of Banking
Money
Money Surplus Units Money Deficit Units
Intermediary

(Savers) (Banks) (Investors)
1.2 Public Sector Banks in India

Banking System in India is dominated by nationalized banks. The nationalization of 14 privately
owned banks in India took place on 19th of July 1969 by Mrs. Indira Gandhi the then prime
minister, with an another installment of nationalization of 6 banks on 15.04.1980. The major
objective of nationalization was to ensure mass banking as against class banking with banking
infrastructure aimed at hilly tracts and terrains of the country. Prior to 1969, State Bank of India
(SBI) was the only public sector bank in India. SBI was nationalized in 1955 under the SBI Act of
1955.
Currently, the following are the public sector banks in India:
Allahabad Bank
Andhra Bank

Bank of Baroda
Bank of India
Bank of Maharashtra

Canara Bank
Central Bank of India
Corporation Bank
Dena Bank
Indian Bank

Indian Overseas Bank
Oriental Bank of Commerce
Punjab and Sind Bank

Punjab National Bank
State Bank of Bikaner & Jaipur
State Bank of Hyderabad
State Bank of India (SBI)
State Bank of Indore

State Bank of Mysore
State Bank of Patiala

LOVELY PROFESSIONAL UNIVERSITY 3