List four consequences of bank nationalization in 1969 and 1980.

List four consequences of bank nationalization in 1969 and 1980. 

Ans. Consequences of Nationalization of banks on Indian economy are given below: 

1. The two decades since nationalization of banks witness the transformation of the Indian banking scenario. The total number of branches which were 8000 in 1969 increased to 60,000 in 1990. Such expansion was the most rapid in rural sector. 

2. The share of rural offices has increased from 17.6% in 1969 to 56% in 1990. for some transactions, they come to withdraw it. Banks know that on an average how many depositors will withdraw in the form of cash and how much. A single depositor may withdraw more or less than average but when there are 

3. The share of rural areas in total deposits rose from about 3% to 15% in the same period. 

4. The rise in share of credit was spectacular from 1.5% in 1969 to 6.3% in 1989. 

5. In all the two decades since the nationalization of commercial banking in India saw banks being taken from its urban confines to vast rural stretches. The expansion of banking into rural areas meant a phenomenal expansion in terms of number of deposits and loan accounts. 

6. The total number of loan accounts shows a rapid increase from about 4 million in 1970 to 60 million in 1990. 

7. In terms of agriculture accounts the increase was about 1 million in 1970 to 10 million in early 1980. 

8. Transport and trade also show significant increase. 

9. Totally neglected areas like small artisans, small scale industry also gets a significant place. 

10.By early 1980’s the share of agriculture in credit has risen to 17%, transport operators about 5% and small scale sector about 12%. 

11. The regional distribution of branches was also shifted away from Maharashtra, South India and Gujarat to rest of the country. 

12.The sharp increase in cash reserve ratio from about 8.3% to 16.8% during the period of 1977 to 1990’s. 

13.It is much evident that initial result of taking credit to rural areas was taking money out of banks but much later with the development of deposit habit that cash outflow tend to decrease. Therefore the nationalization of banks had and still has a great effect on industry banking industry