RAS question
Lead Bank Scheme was introduced on the recommendation of:
Correct answer: (B) Nariman Committee.
The Lead Bank Scheme was introduced by the Reserve Bank of India in December 1969 after the Nariman Committee recommended that each public sector bank concentrate on certain districts as a Lead Bank.
Explanation
The Nariman Committee, formally the Committee of Bankers on Branch Expansion Programme of public sector banks and chaired by F. K. F. Nariman, endorsed the area approach in its November 1969 report. It recommended that each public sector bank should concentrate on specified districts and function there as a Lead Bank, so that banks could discharge their social responsibilities. Acting on these recommendations, the Reserve Bank introduced the Lead Bank Scheme in December 1969. Under the scheme, districts were allotted to banks, which were expected to assume a leadership role in local banking development by coordinating credit deployment with other banks and credit agencies.
Why the other options are wrong
- (A) The Gadgil Study Group supplied the broader area-approach background, but the recommendation that public sector banks function as Lead Banks in selected districts came from the Nariman Committee.
- (C) The Narsimham Committee is associated with banking reforms, whereas the Lead Bank Scheme originated from the 1969 branch-expansion recommendation of the Nariman Committee.
- (D) The Tandon Committee relates to working-capital norms, not the district-level Lead Bank arrangement introduced by RBI in 1969.
Concept
Institutional credit planning and rural banking policy are recurring RAS economy themes because schemes like the Lead Bank Scheme link banking structure with district-level development and credit delivery.