In the 1960s a debate had ensued about the nationalization of the banking industry. Indira Gandhi, then Prime Minister of India, expressed the intention of the Government of India in the annual conference of the All India Congress Meeting in a paper entitled "Stray thoughts on Bank Nationalisation."

Following this, the Government of India issued an ordinance [`Banking Companies (Acquisition and Transfer of Undertakings) Ordinance, 1969`)] which led to the nationalization of India’s 14 largest commercial banks (that contained 85 percent of bank deposits in the country) with effect from the midnight of July 19, 1969. Within two weeks of the issue of the ordinance, the Parliament passed the Banking Companies (Acquisition and Transfer of Undertaking) Bill, and it received the presidential approval on 9 August 1969.

A second dose of nationalization of 6 more commercial banks followed in 1980, thereby allowing the Government of India a control of around 91% of the banking business of India.