The Service Area Approach (SAA) was a scheme launched by the RBI in 1989 for an orderly development of the rural areas with the of the country. Under the SAA, all rural and semi-urban branches of banks were allocated specific villages, generally in geographical difficult areas, the overall development and the credit needs of which were to be taken care of by the respective branches. The concerned bank should meet the banking needs of the service area by creating link between bank credit- production and productivity and income expansion.
Service Area Approach is a modification of the Lead Bank Scheme and is mainly effective insofar as it relate to formulation of credit plans, and the review systems, as recommended by the working group to review the working of the Lead Bank Scheme.
Under this approach, Annual Credit Plans (ACPs) are prepared at the grass root level, i.e., at the level of Service Area Branch of Commercial Banks and Regional Rural Banks (RRBs).
In terms of the earlier scheme, credit plans were first prepared at the district level and targets were distributed down the line to the branches of commercial banks and RRBs.