The Service Area Approach was implemented under the purview of
Answer & explanation
Answer: (b) Lead Bank Scheme
The Service Area Approach was part of the Reserve Bank of India's Lead Bank Scheme. Introduced in April 1989, it assigned each rural and semi-urban bank branch a service area of 15 to 25 villages whose credit needs it had to meet.
- ✓ (b) RBI's Master Circular on the Lead Bank Scheme has a section on the Service Area Approach. It applied to all scheduled commercial banks including Regional Rural Banks and aimed to link bank credit with production, productivity and incomes.
- ✗ (a) The Integrated Rural Development Programme was an anti-poverty self-employment programme run by the government. It did not allocate villages to bank branches.
- ✗ (c) MGNREGS is a wage-employment guarantee scheme with no link to bank-branch service areas.
- • Since then RBI reviewed the approach in December 2004 and dropped its restrictive provisions. Banks are now free to lend in any rural or semi-urban area; village allocation applies only to Government-sponsored schemes (RBI Master Circular).
Remember · Service Area Approach (April 1989) sits under RBI's Lead Bank Scheme: one rural branch, 15 to 25 villages. Its village-allocation rule was relaxed in 2004.
Sources
- RBI Master Circular: Lead Bank Scheme (2024), section 8 Service Area Approach ↗ “The Service Area Approach (SAA) introduced in April 1989 for planned and orderly development of rural and semi-urban areas was applicable to all SCBs including RRBs. … The SAA scheme was reviewed in December 2004 and it was decided to dispense with the restrictive provisions of the scheme”
Question and answer: UPSC's official GS Paper I (2019, Series A) — paper ↗ · answer key ↗. Explanation: Minimalist IAS, checked 30 Sept 2026 (how we verify). ·