Nationalization of banks in India generated a controversy which was meaningless. In fact the public deposits in the banks have increased so much that it is unsafe to leave them in the private hands. Banks by advancing loans to the speculators and non- priority sectors can play havoc with the economy of the country. So banks were nationalized in the larger interests of the nation.
Banks are the custodians of the public money but they were in private hands. Some directors of the banks used to utilize funds for their personal benefit By entering into partnership with some business they would sanction loans and get profits. Thus public money was used for personal profit. In a welfare state a government cannot sleep over the matters that do harm to the public interest.
Banks, thus, used to advance loans to the individuals or non- priority sectors. Planned economy cannot work till all the factors influencing economy are geared up in that direction. Agriculture and cottage industries were to be financed in order to give a fillip to them. This could be done if the government had a control over the disbursement of Banks’ loans.
Nationalization is in accordance with our national policy of adopting socialistic pattern of society. Some may say that industries which provide proper place for exploitation should have been nationalized first They forget that the control of the capital is necessary because it gives power to exploit.
ADVERTISEMENTS:
Another objection raised against nationalization is that it has resulted in inefficient working of the banks. No denying the fact the initiative which the private entrepreneur can take is not possible in a nationalized organization. But can we risk the economy of the country and the public money for the sake of efficiency ?
One legitimate criticism leveled against nationalization is that some banks were not nationalized so that the businessmen may not have to suffer. The government argued that the nationalized banks had the maximum deposits with them and other banks were not in a position to influence the economy of the country. But there should be a complete control over the banks if we want them to boost our economy. Nationalization of banks is the proper step in the proper direction.