Previous Year Question
With reference to India, consider the following events:
Nationalisation of Banks 1969
Formation of Regional Rural Banks 1975
Adoption of villages by Bank Branches.
Which of the above events can be considered as steps taken to achieve “financial inclusion in India”?
Only 2 and 3
1, 2 and 3
Only 1 and 2
Only 3
Correct Answer: B
Detailed Solution
1. Nationalisation of Banks — Correct
In 1969, 14 major commercial banks were nationalised in India. One of the important objectives was to move banking beyond large industries and urban centres and expand institutional credit towards agriculture, small borrowers, weaker sections and rural areas.
After nationalisation, rural branch expansion accelerated considerably. The historical review of Indian banking records a clear post-1969 policy emphasis on expanding banking facilities in unbanked and rural centres.
Thus, bank nationalisation created an important institutional base for later financial-inclusion efforts.
2. Formation of Regional Rural Banks — Correct
Regional Rural Banks (RRBs) were established in 1975 specifically to address the credit requirements of the rural economy.
Their focus included—
small and marginal farmers,
agricultural labourers,
artisans, and
other weaker rural sections.
Thus, the basic purpose of RRBs was to extend institutional banking and credit to groups that had inadequate access to the formal banking system.
3. Adoption of villages by Bank Branches — Correct
Subsequently, specific villages/service areas were assigned to bank branches to make rural credit delivery more systematic.
Under the Service Area Approach introduced in 1989, rural and semi-urban bank branches were generally allocated specified nearby villages. Branches were expected to survey credit needs, identify beneficiaries and prepare annual credit plans for their areas.
The objective was to ensure that rural banking went beyond merely opening branches and addressed the actual banking and credit requirements of individual areas.