Previous Year Question
The basic aim of the Lead Bank Scheme is that:
Big banks should try to open offices in each district
There should be stiff competition among the various nationalised banks
Individual banks should adopt particular districts for intensive development
All the banks should make intensive efforts to mobilise deposits
Correct Answer: C
Detailed Solution
The Lead Bank Scheme was introduced in 1969. Under the scheme, every district was assigned to a particular bank, which was designated as the Lead Bank for that district.
The Lead Bank is not expected to provide all banking services in the district by itself. It leads coordination among banks, government departments and development institutions and facilitates the planned expansion of institutional credit.
Its principal responsibilities include:
Studying the economic and banking potential of the district
Identifying areas and population groups lacking adequate banking facilities
Leading the preparation of the District Credit Plan
Assessing the credit requirements of agriculture, small industries and other priority sectors
Coordinating the activities of banks, NABARD and government departments operating in the district
Reviewing the implementation and progress of credit plans
The Lead Bank also plays a major role in district-level consultative arrangements. The broader purpose is to integrate banking development with the district’s development planning.
Option (a) is incorrect. The scheme does not require every major bank to open an office in every district. Several banks may operate in one district, but the coordinating responsibility is assigned to one Lead Bank.
Option (b) is incorrect. The purpose is coordination among banks and development agencies, not the creation of intense competition among nationalised banks.
Option (d) is incorrect. Deposit mobilisation is a normal banking activity, but it is not the basic objective of the Lead Bank Scheme. Its wider purpose is planned and intensive banking and credit development of the assigned district.