About Article 123, 1969:

• The nationalization of 14 major commercial banks was announced by the government of India through an ordinance under Article 123 of the constitution of India on July 19, 1969, which was later replaced with the Banking Companies Act (Acquisition and transfer of undertakings) passed by the parliament on August 9, 1969.
• The fourteen (14) major commercial banks with a deposit of Rs. 50 crores or above were nationalized by the govt, of India under the Banking Companies Act 1969. Reserve Bank of India describes bank nationalization as the single-most-important economic policy decision taken by any government after 1947.
• The main cause of nationalization of banks has been stated as to include the enlargement of resources for economic growth, the development of agriculture and Industry in backward regions as well as making bank credit available to priority areas which had generally been neglected.
• The major outcomes of the banking industry in the first decade post nationalization (1970-80) includes:
  • Tremendous improvement in branch expansion especially in rural areas. The number of rural bank branches increased ten-fold from about 1,443 in 1969 to 15,105 in 1980.
  • Between 1969 and 1980, credit to agriculture expanded forty-fold from 67 crores to 2,767 crores.
  • Financial savings rose as lenders opened new branches in areas that were unbanked. Gross domestic savings almost doubled as a percentage of national income in the 1970s.
  • The inter-state disparity in the availability of bank offices declined.
  • The growth of the money supply which had been more or less a single-digit figure in the previous decade suddenly increased to 10.5 percent in 1969-70. Between 1961 and 1970, the money supply went up 2.2 times certainly given a fillip to prices and inflation.