In the Indian banking scenario, most public sector banks are referred to as nationalized banks. This classification is, however, inaccurate. According to the IMF (International Monetary Fund), “Nationalization” is defined as “government taking control over assets and over a corporation, usually by acquiring the majority or the whole stake in the corporation”. In 1949, during the early years of the country’s independence, India’s central bank, the RBI (Reserve Bank of India) became the first bank to be nationalized. This was an important move since the RBI would soon become the regulatory authority for banking in India. Most Indian banks at that time were privately owned. Thus, the Indian government then recognized the need to bring them under some form of government control to be ale to finance India’s growing financial needs.
