The State Bank of India Act, 1955 was enacted by the Parliament of India to establish the State Bank of India (SBI) as the country's first public sector bank. The Act was passed on 8th May 1955 and came into force on 1st July 1955. The primary objective of the Act was to create a state-owned banking institution by transferring the assets, liabilities, and operations of the Imperial Bank of India to the newly formed SBI. This move was part of the Indian government's broader strategy to extend banking services, particularly in rural and semi-urban areas, and to promote economic development post-independence.
The Imperial Bank of India, established in 1921 through the amalgamation of the Bank of Bengal, Bank of Bombay, and Bank of Madras, was the largest commercial bank in India at the time. However, its operations were largely concentrated in urban areas, leaving rural regions underserved. The nationalization of the Imperial Bank under the SBI Act aimed to address this imbalance by expanding banking facilities across the country, fostering financial inclusion, and supporting agricultural and small-scale industries.
The State Bank of India Act, 1955, marked a pivotal moment in India's banking history by creating a public sector banking giant with a developmental mandate. SBI played a crucial role in:
Expanding banking access to underserved regions.
Supporting agricultural and rural development through targeted credit programs.
Laying the foundation for nationalization of banks in 1969 and 1980, which further democratized banking in India.