The Indian banking journey: Logic & cure

In part 1 of a series, the author traces the compulsions behind bank nationalisation and the effects of liberalisation on the banking sector

I believe there are three discernible phases in Indian banking post nationalisation till 2018. The 1969-91 post-nationalisation phase; 1992-2012 post-liberalisation phase; and 2013-18 failed clean-up phase.

1969-91: The political brilliance of bank nationalisation for consolidating Indira Gandhi’s socialist credentials is well understood. What is not commented on as well was its strong economic requirem­e­nt. By 1969 the lustre of the freedom mo­v­ement had worn off. Indian political le­a­ders were faced with the demands of fu­ll adult franchise with a poor, third wo­r­­ld, resource-starved economy. India was co­nsidered a global basket case with en­d­­emic hunger and poverty. External bo­r­r­owings were scarce; poor