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Banking & Financial AwarenessMediumAsked in: UPSC Civil Services · CSE Prelims 2019, GS Paper I

The Service Area Approach was implemented under the purview of

  1. A.Integrated Rural Development Programme
  2. B.Lead Bank Scheme
  3. C.Mahatma Gandhi National Rural Employment Guarantee Scheme
  4. D.National Skill Development Mission

Correct answer

B. Lead Bank Scheme

Explanation

The correct answer is B, Lead Bank Scheme. The Service Area Approach, introduced by the RBI in 1989, worked within the framework of the Lead Bank Scheme to plan rural credit village by village.

The Lead Bank Scheme was started by the RBI in 1969, on the recommendation of the Gadgil Study Group and the Nariman Committee, and gave one bank the lead role in each district for coordinating banking development. Under the Service Area Approach of April 1989, each rural and semi-urban branch of a commercial or regional rural bank was given a group of 15 to 25 villages as its service area, and it prepared credit plans for them. The rigid allotment was later relaxed in 2004, but the district-level lead bank arrangement continues.

A is wrong because IRDP, launched in 1978-80, was a poverty alleviation programme that used bank credit but did not set up service areas. C is wrong because MGNREGA, of 2005, guarantees wage employment. D is wrong because the National Skill Development Mission of 2015 deals with skill training.

Exam tip: Lead Bank Scheme 1969 (Gadgil Group, Nariman Committee); Service Area Approach 1989.

Practice Questions

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Q1.Banking & Financial AwarenessAsked in: UPSC Civil Services · CSE Prelims 2017, GS Paper IEasy

Consider the following statements : 1. National Payments Corporation of India (NPCI) helps in promoting the financial inclusion in the country. 2. NPCI has launched RuPay, a card payment scheme. Which of the statements given above is/are correct ?

  1. A.1 only
  2. B.2 only
  3. C.Both 1 and 2
  4. D.Neither 1 nor 2
Show answer
Correct answer: C. Both 1 and 2

The National Payments Corporation of India was set up in 2008 as the umbrella body for retail payments in the country, on the initiative of the Reserve Bank of India and the Indian Banks' Association, under the Payment and Settlement Systems Act, 2007.

Q2.Banking & Financial AwarenessAsked in: UPSC Civil Services · CSE Prelims 2026, GS Paper IHard

Consider the following statements about the Non-Banking Financial Companies (NBFCs) in India : 1. NBFCs cannot accept demand deposits. 2. All the NBFCs operating in India have to be registered with the RBI. 3. NBFCs form part of the payment and settlement system and can issue cheque drawn on itself. 4. Deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation (DICGC) is not available to the depositors of deposit taking NBFCs. Which of the statements given above is/are correct ?

  1. A.1 and 4
  2. B.1, 2 and 3
  3. C.4 only
  4. D.2, 3 and 4
Show answer
Correct answer: A. 1 and 4

These are two of the three ways the RBI itself says an NBFC differs from a bank. An NBFC lends and invests like a bank, but it cannot accept demand deposits such as savings or current accounts, so statement 1 is correct.

Q5.Banking & Financial AwarenessAsked in: UPSC Civil Services · CSE Prelims 2023, GS Paper IMedium

With reference to Central Bank digital currencies, consider the following statements: 1. It is possible to make payments in a digital currency without using US dollar or SWIFT system. 2. A digital currency can be distributed with a condition programmed into it such as a time-frame for spending it. Which of the statements given above is/are correct?

  1. A.1 only
  2. B.2 only
  3. C.Both 1 and 2
  4. D.Neither 1 nor 2
Show answer
Correct answer: C. Both 1 and 2

A central bank digital currency can settle payments directly between countries without the dollar or SWIFT, and it can be programmed with conditions on its use.