From 50 Years Ago: Commercial Banks: Four Years after Nationalisation

Bhabatosh Datta

Four years after the major commercial banks were acquired by the Government of India, the primary question one is tempted to ask is whether these banks really came under government ownership in 1969. There is no doubt about the legal position. The ‘existing banks’ received their compensations, though these may not have been distributed among the shareholders. The ‘corresponding new banks’ are all governed by Boards appointed by the government and headed by Chairmen-Managing Directors also appointed by the government after consulting the Reserve Bank. Even the appointment of workmen’s representatives is made by the Government from out of a panel of three names selected by the workmen. In addition, two officials — one from the Central Government and the other from the Reserve Bank of India — are included on each of the Boards. The government has wide powers to give directions to the Boards. The government has all the rights of ownership and control. If, nevertheless, these rights have not been exercised with a view to attaining the objectives of nationalisation, it is necessary to find out what have been the inhibiting factors.