MONEY AND BANKING (Part – I)

121. Consider the following pairs: [U.P.S.C. (Pre) 2009]

Large Bank	Country of origin
1. ABN AMRO Bank	USA
2. Barclays Bank	UK
3. Kookmin Bank	Japan

Which of the above pair(s) is/are correctly matched?

(a) 1 only
(b) 2 only
(b) 1 and 2
(d) 2 and 3

Correct Answer: (b) 2 only

Solution:The correctly matched pairs are as follows :

Large Bank	Country of origin
1. ABN AMRO Bank	Netherlands
2. Barclays Bank	United Kingdom
3. Kookmin Bank	South Korea

So option (b) is the correct answer.

122. Consider the following : [U.P.P.C.S.(Mains) 2005]

1. Regional Rural Banks

2. Lead Bank Scheme

3. NABARD

4. State Bank of India

The correct chronological sequence of establishment of these banks are :

Option	A	B	C	D
(a)	4	3	1	2
(b)	4	2	1	3
(c)	2	3	4	1
(d)	2	1	4	3

(a)
(b)
(c)
(d)

Correct Answer: (b)

Solution:

Bank	Year of Establishment
State Bank of India	1955
Lead Bank Scheme	1969
Regional Rural Banks	1975
NABRARD	1982

123. Consider the following statement: [U.P.S.C. (Pre) 2003]

1. The maximum limit of shareholding of Indian promoters in private sector banks in India is 49 percent of the paid up capital.
2. Foreign Direct Investment Up to 49 percent from all sources is permitted in private sector banks in India under the automatic route.

Which of these statements is/are correct?

(a) Only 1
(b) Only 2
(c) Both 1 and 2
(d) Neither 1 nor 2

Correct Answer: (b) Only 2

Solution:As per the RBI's licensing guidelines for new Private Sector Banks in January 2001, the initial minimum required paid-up capital for a new private bank was set at Rs. 200 crore, which was required to be raised further to Rs. 300 within the three years of commencement of business. The promoter's contribution was required to be a minimum of 40 percent of the paid-up capital of the bank. In February, 2002, the RBI raised the FDI limit from 20% to 49% in private sector banks from all sources. Hence as per the question period, Statement 1 is incorrect and 2 is correct. At present, FDI limit in Private Sector Banks is raised up to 74% (49% under the automatic route and above 49% to 74% under the government route.

124. The percentage rural branches of all kinds of private, public sector commercial Banks including Regional Rural Banks as on 30.06.2012, according to RBI, was approximately : [U.P.P.C.S. (Mains) 2012]

(a) 17%
(b) 27%
(c) 37 %
(d) 47%

Correct Answer: (c) 37 %

Solution:As per RBI data, the percentage of rural branches of all types of private and public sector commercial banks including RRBs as on 30 June, 2012 was about 37%. On end-March, 2023, the total number of scheduled commercial bank branches is 126445 in which number of rural branches of public sector banks is 29006, while number of rural branches of private sector banks is 8417 and of foreign banks is 124. As on 31 March, 2023, the total number of regular branches of Regional Rural Banks is 21995 in which number of rural branches is 15646. Hence, as on end-March, 2023, the percentage of rural branches of all kinds of scheduled commercial banks including RRBs is about 36%.

125. The 'Lead Bank' Scheme was launched in : [U.P.P.C.S. (Spl.) (Mains) 2004]

(a) October, 1966
(b) October, 1969
(c) December, 1969
(d) December, 1980

Correct Answer: (c) December, 1969

Solution:The genesis of the Lead Bank Scheme (LBS) can be traced to the Study Group headed by Prof. D.R. Gadgil (Gadgil Study Group) on the Organizational Framework for the Implementation of the Social Objectives, which submitted its report in October, 1969. A Committee of Bankers on Branch Expansion Programme of Public Sector Banks appointed by the Reserve Bank of India under the Chairmanship of F.K.F. Nariman (Nariman Committee) endorsed the idea of an 'Area Approach' in its report (November, 1969), recommending that in order to enable the Public Sector Banks to discharge their social responsibilities, each bank should concentrate on certain districts where it should act as a 'Lead Bank'. Pursuant to the above recommendations, the Lead Bank Scheme was introduced by the Reserve Bank of India in December, 1969. The Scheme aims at coordinating the activities of banks and other developmental agencies through various fora in order to achieve the objective of enhancing the flow of bank finance to the priority sector and other sectors and to promote banks' role in the overall development of the rural sector. For coordinating the activities in the district, a particular bank is assigned 'Lead Bank' responsibility of the district. The Lead Bank is expected to assume a leadership role for coordinating the efforts of the credit institutions and the Government. The Lead Bank Scheme was last reviewed by the High Level Committee headed by Smt. Usha Thorat, the then Deputy Governor of the Reserve Bank of India in 2009.

126. L.B.S. is one of the economic measures taken by the Government of India for financial inclusion. What is L.B.S. in this context? [U.P.P.C.S. (Pre) 2022]

(a) Lead Banking Scheme
(b) Loan Banking Scheme
(C) Lead Breaking System
(d) Loan Banking System

Correct Answer: (a) Lead Banking Scheme

Solution:The genesis of the Lead Bank Scheme (LBS) can be traced to the Study Group headed by Prof. D.R. Gadgil (Gadgil Study Group) on the Organizational Framework for the Implementation of the Social Objectives, which submitted its report in October, 1969. A Committee of Bankers on Branch Expansion Programme of Public Sector Banks appointed by the Reserve Bank of India under the Chairmanship of F.K.F. Nariman (Nariman Committee) endorsed the idea of an 'Area Approach' in its report (November, 1969), recommending that in order to enable the Public Sector Banks to discharge their social responsibilities, each bank should concentrate on certain districts where it should act as a 'Lead Bank'. Pursuant to the above recommendations, the Lead Bank Scheme was introduced by the Reserve Bank of India in December, 1969. The Scheme aims at coordinating the activities of banks and other developmental agencies through various fora in order to achieve the objective of enhancing the flow of bank finance to the priority sector and other sectors and to promote banks' role in the overall development of the rural sector. For coordinating the activities in the district, a particular bank is assigned 'Lead Bank' responsibility of the district. The Lead Bank is expected to assume a leadership role for coordinating the efforts of the credit institutions and the Government. The Lead Bank Scheme was last reviewed by the High Level Committee headed by Smt. Usha Thorat, the then Deputy Governor of the Reserve Bank of India in 2009.

127. The functions of the Lead Bank are performed by : [U.P.P.C.S. (Mains) 2007]

(a) State Bank of India
(b) Reserve Bank of India
(c) Any Bank
(d) A bank designated for this purpose

Correct Answer: (d) A bank designated for this purpose

Solution:The genesis of the Lead Bank Scheme (LBS) can be traced to the Study Group headed by Prof. D.R. Gadgil (Gadgil Study Group) on the Organizational Framework for the Implementation of the Social Objectives, which submitted its report in October, 1969. A Committee of Bankers on Branch Expansion Programme of Public Sector Banks appointed by the Reserve Bank of India under the Chairmanship of F.K.F. Nariman (Nariman Committee) endorsed the idea of an 'Area Approach' in its report (November, 1969), recommending that in order to enable the Public Sector Banks to discharge their social responsibilities, each bank should concentrate on certain districts where it should act as a 'Lead Bank'. Pursuant to the above recommendations, the Lead Bank Scheme was introduced by the Reserve Bank of India in December, 1969. The Scheme aims at coordinating the activities of banks and other developmental agencies through various fora in order to achieve the objective of enhancing the flow of bank finance to the priority sector and other sectors and to promote banks' role in the overall development of the rural sector. For coordinating the activities in the district, a particular bank is assigned 'Lead Bank' responsibility of the district. The Lead Bank is expected to assume a leadership role for coordinating the efforts of the credit institutions and the Government. The Lead Bank Scheme was last reviewed by the High Level Committee headed by Smt. Usha Thorat, the then Deputy Governor of the Reserve Bank of India in 2009.

128. The basic aim of Lead Bank Scheme is that : [U.P.S.C. (Pre) 2012]

(a) big banks should try to open offices in each district
(b) there should be stiff competition among the various
(c) individual banks should adopt particular districts for intensive development
(d) all the banks should make intensive efforts to mobilize deposits

Correct Answer: (c) individual banks should adopt particular districts for intensive development

Solution:The genesis of the Lead Bank Scheme (LBS) can be traced to the Study Group headed by Prof. D.R. Gadgil (Gadgil Study Group) on the Organizational Framework for the Implementation of the Social Objectives, which submitted its report in October, 1969. A Committee of Bankers on Branch Expansion Programme of Public Sector Banks appointed by the Reserve Bank of India under the Chairmanship of F.K.F. Nariman (Nariman Committee) endorsed the idea of an 'Area Approach' in its report (November, 1969), recommending that in order to enable the Public Sector Banks to discharge their social responsibilities, each bank should concentrate on certain districts where it should act as a 'Lead Bank'. Pursuant to the above recommendations, the Lead Bank Scheme was introduced by the Reserve Bank of India in December, 1969. The Scheme aims at coordinating the activities of banks and other developmental agencies through various fora in order to achieve the objective of enhancing the flow of bank finance to the priority sector and other sectors and to promote banks' role in the overall development of the rural sector. For coordinating the activities in the district, a particular bank is assigned 'Lead Bank' responsibility of the district. The Lead Bank is expected to assume a leadership role for coordinating the efforts of the credit institutions and the Government. The Lead Bank Scheme was last reviewed by the High Level Committee headed by Smt. Usha Thorat, the then Deputy Governor of the Reserve Bank of India in 2009.

129. The Service Area Approach was implemented under the purview of : [U.P.S.C. (Pre) 2019]

(a) Integrated Rural Development Programme
(b) Lead Bank Scheme
(c) Mahatma Gandhi National Rural Employment Guarantee Scheme
(d) National Skill Development Mission

Correct Answer: (b) Lead Bank Scheme

Solution:The Service Area Approach (SAA) was implemented under the purview of Lead Bank Scheme (LBS). The Service Area Approach (SAA) introduced in April, 1989 for planned and orderly development of rural and semi-urban areas was applicable to all scheduled commercial banks including Regional Rural Banks. Under SAA, each bank branch in rural and semi-urban area was designated to serve an area of 15 to 25 villages and the branch was responsible for meeting the needs of bank credit of its service area. The primary objective of SAA was to increase productive lending and forge effective linkages between bank credit, production, productivity and increase in income levels. The SAA scheme was reviewed from time to time and appropriate changes were made in the scheme to make it more effective.

The Service Area Approach scheme was last reviewed in December, 2004 and it was decided to dispense with the restrictive provisions of the scheme while retaining the positive features of the SAA such as credit planning and monitoring of the credit purveyance. Accordingly, under SAA the allocation of villages among the rural and semi- urban branches of banks were made not applicable for lending except under Government Sponsored schemes. Thus, while the commercial banks and RRBs are free to lend in any rural and semi-urban area, the borrowers have the choice of approaching any branch for their credit requirements. Therefore, the requirement of obtaining 'no due certificate' from the service area branch for lending by non-service area branch has been dispensed with. However, banks at their discretion may take 5 steps considered necessary to avoid multiple financing. As the restrictive provisions of the service area have been removed in December 2004, the Service Area Approach is applicable only for Government Sponsored programmes.

130. District Credit Planning is done : [U.P. Lower Sub. (Pre) 2002, 2003]

(a) Under the Lead bank
(b) Under the NABARD
(C) Under the District Magistrate
(d) Under the SBI

Correct Answer: (a) Under the Lead bank

Solution:At district level, district credit planning is done under the Lead bank.

The Reserve Bank of India launched the Lead Bank Scheme. The objective was to ensure financial inclusion and provide banking services. The scheme aimed to serve all sections of society. The Lead Bank Scheme aimed to establish a lead bank in every district of India. The lead bank would coordinate with other banks and financial institutions in the area. The purpose was to ensure effective and efficient utilization of banking facilities. The scheme also aimed to increase credit flow to priority sectors. The scheme aimed to promote rural development.
The Lead Bank Scheme was launched in 1969. It's designed to provide banking and credit to rural areas. The scheme follows the 'service area approach.' A specific bank services each area. The Gadgil Study Group and Banker's Committee suggested the scheme. They found that rural regions needed more banking services. This was due to the need for more commercial banks.