Arguments for :
1. Before nationalization, the commercial banks in India used to give loan to unscrupulous persons who used to indulge in speculation of essential commodities. Consequently the prices of the commodities rose very high and the economy of the country as well as the patience of the people were taxed.
2. Some of the banks have started giving money to politicians for contesting election, under one or the other pretext. Consequently money started playing an important role in the elections and had it continued it would have been a serious threat to the very existence of democracy.
3. The banks were ignoring national priorities and so the economic policies which were mooted by the Government could not succeed. It was necessary to provide adequate finance to the Agriculturists and to the educated unemployed. After nationalization the banks have started working in accordance with the policies of the Government.
Arguments against :
1. Banks or any other public dealing institution if nationalized results in frustration among the people because the institution becomes inefficient and does not bother about the public. This may result in less deposit and loss of confidence in the banks.
2. After nationalization the commercial banks have become an effective tool in the hands of the ruling party. The party in power forces the banks to give loan to the supporters of their party and can also get money for contesting elections on one or the other pretext. Under such circumstances the nationalization of the banks has gone against the interest of the common man.
3. Only 20 banks have been nationalized and the government has justified its action by saying that nationalization of all the banks was not necessary because they wanted the public sector and the private sector banks to compete with each other. In fact there can be no competition between the public sector and private sector banks as it is between public and private sector industries because the Reserve Bank controls monetary activities of the Commercial Banks in the country.