Q. Which of the following is/are reason/reasons for nationalization of banks?
1.Low access to banking system by masses.
2.Government needed to direct the resources for greater public benefit.
3.Needed capital for implementing planned development (5-year plans).
Choose the correct answer from below given codes:

[A] 1 only

[B] 1 and 2 only

[C] 2 and 3 only

[D] 1, 2 and 3

Answer: D

Explanation: The development of banking industry in India has been intertwined with the story of its nationalization.

Once the Reserve Bank of India (RBI) was nationalized in 1949 and a central banking was in place, the government considered the nationalizing of selected private banks in the country due to the following major reasons:

  1. As the banks were owned and managed by the private sector the services of the banking were having a narrow reach—the masses had no access to the banking service;
  2. The government needed to direct the resources in such a way that greater public benefit could take place;
  3. The planned development of the economy required a certain degree of government control on the capital generated by the economy.

Source: TMH Ramesh Singh