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Can You Describe The Disadvantages Of Nationalization Of Commercial Bank?

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Haider Imtiaz Profile
Haider Imtiaz answered
The disadvantages are as follows
1. Low performance: When the ownership is in public sector, the employs do not work for profit and do not there performance and efficiency of the employs remains poor.
2. Lack of competition: Competition is necessary for development and increasing the production. Nationalization has decreased the spirit of competition.

3. Favoritism: The management of nationalize bank will provide jobs to there favored persons because the political leaders have influence upon the state authorities. Policy of partiality is adopted by the nationalized banks.

4. Unbalanced distribution of credit: Agricultural sector is the major sector of the economy. It should be given top priority in connection with distribution of credit. After nationalization, balance distribution of credit has not been made. Industrial sector got more than 45% of total bank credit. The share of agricultural sector had been only 9%.
5. Encourage political monopoly: Nationalization of banks will increase the influence of politicians over fiscal and monitory structure of country. It will encourage political monopoly in the country.

6. Increase the burden of the government: Government has to run many sectors of the economy after nationalization of banks. There will be an extra burden on the government. It is in the favor of the nation of that policy of the denationalization should be adopted.
7. Decrease the process of industrialization: Privatization is necessary for increasing the process of industrialization. When the banks will be nationalized, they will not provide credit facility so actively for setting up industrial units in different parts of the country.

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