Historically, commercial banks in India were privately held. However, postindependence, from 1951, the Government of India adopted planned economic development for the country through Five Year Plans. The economic planning envisaged state ownership of the economic means of production to sub-serve the social welfare objectives of planning. The commercial banks lagged in attaining the social objectives.
It was felt that banks controlled by business houses failed in catering to the credit needs of poorer sections of society, such as farmers, craftsmen, etc. and to the credit needs of small and cottage industries. Therefore, the Government of India nationalized 14 major commercial banks in 1969. All commercial banks with a deposit base over ₹ 500 million were nationalized then.