1. Lead Bank Scheme:
The lead bank scheme was introduced by the Reserve Bank of India towards the end of 1969 with the objective of enabling the commercial banks to assume the role of leadership for the development of banking and credit facilities throughout the country on the basis of area approach.
The main objectives of a lead bank are:
•To open branches in all the important localities of the lead district;
•To extend maximum credit facilities for development in the district;
•To mobilize the savings of the people in the district and
•To co-ordinate the activities of co-operative banks, commercial banks, and other financial institutions in the district.
2. Branch Expansion:
There has been a spectacular expansion of bank branches after the nationalization of major commercial banks in 1969. The lead bank scheme has played an important role in the bank expansion program.
3. Coverage of Rural Areas:
The main thrust of the branch expansion policy in the post-nationalization period has been on increasing the banking facilities in rural areas. There has been a significant increase in the rural branches of banks since 1969. The number of branches in rural areas having a population of up to 10,000 has increased from 1832 in June 1969 to 46976 in June 2014.
4. Reduction of Regional Imbalances:
Another highlight of the branch expansion policy since the nationalization of banks has been to extend banking facilities in the deficit and unbanked areas and to reduce the regional imbalances. Systematic efforts are being made to increase banking facilities in the rural and semi-urban areas of the deficit districts of the country.
5. Expansion of Bank Deposits:
Since the nationalization of banks, there has been a significant increase in deposits of commercial banks. During the 18 years of the pre-nationalization period, the deposits in the scheduled banks increased from Rs. 908 crore in 1951 to Rs. 4646 crore in 1969 (i.e., about 5 times increase).
6. Change in Composition of Deposits:
The relative proportions of demand and time deposits have also changed markedly after the nationalization of banks. The proportion of time deposits has increased continuously from 50% in 1951 to 75% in 1969 and further to 90% in December 2014. This is a clear indication of a shift in favor of fixed deposits of the commercial banks.
7. Credit Expansion:
The expansion of bank credit has also been more spectacular in the post-bank nationalization period. Over a period of 18 years before bank nationalization, the total advances of scheduled banks increased from Rs. 547 crore in 1951 to Rs. 3599 crore in 1969 (i.e. about 7 times increase).
8. Investment in Government Securities:
The nationalized banks were also expected to provide finance for the economic plans of the country through the purchase of government securities. There has been a significant increase in the investment of the banks in government and other approved securities which increased from Rs. 1727 crore in March 1970 to Rs. 2437760 crore in 2014.
9. Financial Inclusion:
Financial inclusion has been embodied as an objective of economic policy in India since independence. However, since 2006, it has been an explicit policy endeavor of the Reserve Bank. Various initiatives have been undertaken by both the Reserve Bank and the Government of India to ensure universal financial access especially post-2005.
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