Let me start this post by making a statement — All nationalised banks are public sector banks, but not all public sector banks are nationalised banks.

From this hopefully, you understood that nationalised banks are a subset of public sector banks. If not, you would like to see our post on difference between private and public sector banks. It is important that you understand what public sector banks are before getting into nationalised banks. Now Let’s go deeper.

Nationalised Banks And How They Were Formed

What is nationalisation?

Nationalization is a process by which a government can take over a private entity and convert it to a publically held entity. Normally, this would require passing a bill in the parliament.

So, a nationalized bank is formed by taking a bank and its assets into the public ownership. A total of 20 private banks were nationalized in India under the “Banking Companies (Acquisition and Transfer of Undertaking) Bill”. 14 private banks were nationalized in 1969 and another 6 were nationalized in 1980.

Some Examples

Here is an example to explain this.

The Punjab National Bank was founded in 1894 under companies Act. Interesting fact – Lala Lajpai Rai was one one of the founding members. It was nationalized by GoI in 1969. So now PNB is both a nationalised bank and also a Public Sector Bank.

But Bhartiya Mahila Bank founded only in 2013. So even though it is a public sector bank it is not a nationalised bank.

List Of Nationalised Banks In India

As of now there are a total of 19 nationalised banks in India. The table below provides a list of nationalised banks, their year of establishment and location of their headquarters.

Wait a minute. In the previous section, I said that 20 private banks were nationalised in India. But the list above has only 19 banks. Why? This is because one of the nationalised banks “New Bank of India” was merged with the Punjab National Bank.

Are SBI Or Its Associates Nationalised Banks?

Before 1955, SBI was known as Imperial Bank of India – a private bank. In 1955, the Parliament passed the State Bank of India Act and RBI took over the majority shares (60%) of the bank. The Imperial Bank of India was renamed as State Bank of India and it became a public sector bank.

A few years later in 1959, government passed the State Bank of India (Subsidiary Banks) Act. As a result 7 princely state level Banks became associate banks of SBI. Now there are only 5 associate banks, as State Bank of Saurashtra and State Bank of Indore were merged into SBI.

So, even though a private bank was taken over by the government, SBI is not called a nationalised bank. Nationalised banks are only those banks which were nationalised under the Banking Companies (Acquisition and Transfer of Undertaking) Bill.

By the time this bill came up in 1969, SBI was already a public sector bank.

Also see our post on Nationalised Banks Logo And Slogans