Their profitability came down and the efficiency of the staff became suspect.
Non-performing assets of these banks began to rise.
The interests of the poorer sections as well as those of the common man were being ignored.
In 1969, Indian government took a historic decision to nationalise 14 biggest private commercial banks.
This resulted in providing fillip the banking facilities to the rural areas, to the under-privileged and the downtrodden.
It also resulted in financial inclusion of all categories of people in almost all the regions of the country.
The rural areas, representing vast majority of Indian society, remained dependent on the indigenous money lenders for their credit needs.
Independence of the country heralded a new era in the growth of modern banking.
Towards the beginning of the twentieth century, with the onset of modern industry in the country, the need for government regulated banking system was felt.
The British government began to pay attention towards the need for an organised banking sector in the country and Reserve Bank of India was set up to regulate the formal banking sector in the country.