Public Sector Banks, Nationalised Banks, State Bank of India

 

Public Sector Banks:

• Banks where a majority stake (i.e. more than 50%) is held by the Government. 
• All the Public sector banks (PSB) except SBI are nationalized banks. 
• At present, there are 12 Public Sector Banks in India including SBI and 11 Nationalized Banks. 
• IDBI now comes under Private Bank as GOI shareholding has reduced below 50 % and the maximum shareholding is with LIC.

NATIONALIZED BANK:

• Banks which have been taken over by a national or State government by an Act or ordinance or some other kind of orders.  
• This strategy has been frequently adopted by socialist governments for transition from Capitalism to Socialism.  
• GoI did nationalisation of Banks twice. For the first time, 14 commercial banks were nationalized through an Ordinance (Banking Companies (Acquisition and Transfer of Undertakings) in 1969 Similarly in 1980, GoI again nationalised 6 more banks.   Thus, in total 20 banks were nationalized.

Status of State Bank of India: 

• At the time of independence, this bank was known as Imperial Bank of India and was a Joint Stock Company.
• In 1955, Reserve Bank of India acquired a controlling interest in the Imperial Bank of India under the provisions of the State Bank of India Act 1955.   
• On 30th April 1955, the Imperial Bank of India became State Bank of India.  
• RBI continued to have controlling interest in SBI till recently when Government of India decided to acquire RBI's stake in SBI (59.7 % ) in 2008 so as to remove any conflict of interest .

Why SBI was not nationalized during the waves of Nationalization of Banks :

• SBI was already under State control in 1969/1980, vide SBI Act, 1955. 
• So, there was no need of Nationalization of State Bank of India. 
• Banks which were nationalized in 1969/1980 were either owned by private business groups or individual investors.
• Hence SBI has special status as it is Public sector bank but not the nationalised bank.