UPSC Prelims 2019 Question:

The Service Area Approach was implemented under the purview of

Explanation:

• A Study Group headed by Prof. D. R. Gadgil (Gadgil Study Group) in its report in October 1969, recommended the adoption of an 'Area Approach' to evolve plans and programs for the development of an adequate banking and credit structure in the rural areas. Pursuant to the above recommendations, the Lead Bank Scheme was introduced by the Reserve Bank of India in 1969.
  
  
• The Service Area Approach (SAA) was introduced under the Lead Bank Scheme in April 1989 for the planned and orderly development of rural and semi-urban areas. SAA was applicable to all scheduled commercial banks including Regional Rural Banks. Under SAA, each bank branch in a rural or semi-urban area was designated to serve an area of 15 to 25 villages and the branch was responsible for meeting the needs of bank credit of its service area. The objective of SAA was to increase productive lending and forge effective linkages between bank credit, production, productivity, and increase in income levels.
  
  

Therefore, option (2) is the correct answer.

Subject: Economics | Money and Banking