1. The genesis of 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 implementation of the social objectives, which submitted its report in October 1969. The Study Group drew attention to the fact that commercial banks did not have adequate presence in rural areas and also lacked the required rural orientation. The Study Group, therefore, recommended the adoption of an ‘Area Approach’ to evolve plans and programmes for the development of an adequate banking and credit structure in the rural areas.
  2. A Committee of Bankers on Branch Expansion Programme of public sector banks appointed by Reserve Bank of India under the Chairmanship of Shri F. K. F. Nariman (Nariman Committee) endorsed the idea of 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’.
  3. Pursuant to the above recommendations, the Lead Bank Scheme was introduced by 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 priority sector and other sectors and to promote banks’ role in overall development of the rural sector. For coordinating the activities in the district, a particular bank is assigned the lead bank responsibility of the district. The lead bank is expected to assume leadership role for coordinating the efforts of the credit institutions and Government.
  4. In view of the several changes that had taken place in the financial sector, the Lead Bank Scheme was last reviewed by the High Level Committee headed by Smt Usha Thorat, Deputy Governor of the Reserve Bank of India in 2009.
  5. The High Level Committee held wide ranging discussions with various stakeholders viz. State Governments, banks, development institutions, academicians, NGOs, MFIs etc. and noted that the Scheme has been useful in achieving its original objectives of improvement in branch expansion, deposit mobilisation and lending to the priority sectors, especially in rural/semi urban areas. There was overwhelming consensus that the Scheme needs to continue. Based on the recommendations of the Committee, guidelines were issued to SLBC Convenor banks and lead banks for implementation.
  6. Envisaging greater role for private sector banks, the lead banks were advised to ensure that private sector banks are more closely involved in the implementation of the Lead Bank Scheme. The private sector banks should involve themselves more actively by leveraging on Information Technology bringing in their expertise in strategic planning. They should also involve themselves in the preparation as well as implementation of the District Credit Plan.

2. Fora under Lead Bank Scheme

Block Level Bankers’ Committee (BLBC)

BLBC is a forum for achieving coordination between credit institutions and field level development agencies at the block level. The forum prepares and reviews implementation of Block Credit Plan and also resolves operational problems in implementation of the credit programmes of banks. Lead District Manager of the district is the Chairman of the Block Level Bankers’ Committee. All the banks operating in the block including the district central co-operative banks, RRBs, Block Development Officer, technical officers in the block, such as extension officers for agriculture, industries and co-operatives are members of the Committee. BLBC meetings are held at quarterly intervals. The Lead District Officer (LDO) of RBI and the District Development Manager (DDM) of NABARD selectively attend the meetings of the BLBCs. The representatives of Panchayat Samitis are also invited to attend the meetings at half yearly intervals so as to share their knowledge and experience on rural development in the credit planning exercise.

District Consultative Committee (DCC)

Constitution of DCC

DCCs were constituted in the early seventies as a common forum at district level for bankers as well as Government agencies/departments to facilitate coordination in implementing various developmental activities under the Lead Bank Scheme. The District Collector is the Chairman of the DCC meetings. Reserve Bank of India,

NABARD, all the commercial banks in the district, co-operative banks including District Central Cooperative Bank (DCCB), RRBs, various State Government departments and allied agencies are the members of the DCC. The Lead District Officer (LDO) represents the Reserve Bank as a member of the DCC. The Lead District Manager convenes the DCC meetings. The Director of Micro Small and Medium Enterprises Development Institutes (MSME-DI) is an invitee in districts where MSME clusters are located to discuss issues concerning MSMEs.

Conduct of DCC Meetings

  1. DCC meeting should be convened by the lead banks at quarterly intervals.
  2. At the DCC level, sub-committees as appropriate may be set up to work intensively on specific issues and submit reports to the DCC for its consideration.
  3. DCC should give adequate feedback to the SLBC on various issues that needs to be discussed on a wider platform, so that these receive adequate attention at the State Level.

Agenda for DCC Meetings

While lead banks are expected to address the problems particular to the concerned districts, some of the important areas which are common to all districts which the lead banks should invariably discuss in the fora are as under:

  1. Review of progress under financial inclusion plan (FIP).
  2. The specific issues inhibiting and enabling IT enabled financial inclusion
  3. Issues to facilitate ‘enablers’ and remove/minimise ‘impeders’ for banking development for inclusive growth
  4. Monitoring initiatives for providing ‘Credit Plus’ activities by banks and State Governments such as setting up of Financial Literacy Centres (FLCs) and RSETI type Training Institutes for providing skills and capacity building to manage businesses.
  5. Scaling up financial literacy efforts to achieve financial inclusion.
  6. Review of performance of banks under District Credit Plan (DCP)
  7. Flow of credit to priority sector and weaker sections of the society
  8. Doubling of Farmers’ Income by 2022
  9. Assistance under Government sponsored schemes
  10. Grant of educational loans
  11. Progress under SHG – bank linkage
  12. SME financing & bottlenecks thereof, if any
  13. Timely submission of data by banks
  14. Review of relief measures (in case of natural calamities wherever applicable) The above list is illustrative and not exhaustive. The lead banks may include any other agenda item considered necessary.

Role of LDMs

As the effectiveness of the Lead Bank Scheme depends on the dynamism of the District Collectors and the Lead District Managers (LDMs), with supportive role of the Regional/Zonal Office, the office of LDM should be sufficiently strengthened with appropriate infrastructural support being the focal point for successful implementation of the Lead Bank Scheme. Officers of appropriate level and attitude should be posted as LDMs. Apart from the usual role of LDMs like convening meetings of the DCC/DLRC and periodical meetings of DDM/LDO/ Government officials for resolving outstanding issues etc., the new functions envisaged for LDMs include the following:

  1. Monitoring implementation of district credit plan
  2. Associate with the setting up of Financial Literacy Centres (FLCs), RSETIs by banks
  3. Associate with organizing financial literacy camps by FLCs and rural branches of banks.
  4. Holding annual sensitisation workshops for banks and Government officials with participation by NGOs/Panchayati Raj Institutions (PRIs)
  5. Arranging for quarterly awareness and feedback public meetings, grievance redressal etc.

Quarterly Public Meeting and Grievance Redressal

The Lead District Manager should convene a quarterly public meeting at various locations in the district in coordination with the LDO of Reserve Bank, banks having presence in the area and other stakeholders to generate awareness of the various banking policies and regulations relating to the common person, obtain feedback from the public and provide grievance redressal to the extent possible at such meetings or facilitate approaching the appropriate machinery for such redressal.

District Level Review Committee (DLRC) Meetings

DLRC meetings are Chaired by the District Collector and attended by members of the District Consultative Committee (DCC). Besides above, public representatives

i.e. Local MPs/MLAs/ Zilla Parishad Chiefs are also invited to these meetings. The DLRC meetings should be convened by the lead banks at least once in a quarter. In DLRC meetings review of the programmes under Lead Bank Scheme is carried out by getting feedback to know the pace and quality of the implementation of various programmes in the district. Hence association of non-officials is considered useful. Lead banks are required to ensure the presence of public representatives in DLRC meetings as far as possible. Therefore, Lead banks should fix the date of DLRC meetings with due regard to the convenience of the representatives of the public i.e. MPs/MLAs etc. and invite and involve them in all functions conducted by the banks in the districts, such as opening of new branches, distribution of Kisan Credit Cards, SHG credit linkage programmes etc. Responses to queries from public representatives need to be accorded highest priority and attended to promptly. The follow up of DLRC’s decisions is required to be discussed in the DCC meetings.

DCC/DLRC meetings- Annual Calendar of Meetings

  1. DCC and DLRC are the important coordinating fora among commercial banks, Government agencies and others at district level to review and find solutions to the problems hindering the developmental activities. Therefore, it is necessary that all the members participate and deliberate in the above meetings. On a review of the DCC/DLRC meetings, it was observed that late receipt/non-receipt of intimation of the date of meetings, clash of dates with other events, commonality of dates etc. hinder participation of members in these meetings, thus undermining the prime objective of conducting the above meetings.
  2. Lead banks have, therefore, been advised to prepare annual schedule of DCC and DLRC meetings on Calendar year basis for all districts in consultation with the Chairperson of the meetings, lead district officer of RBI and Public Representatives in case of DLRC. This yearly Calendar should be prepared in the beginning of each year and circulated to all members as advance intimation for blocking future dates to attend the DCC and DLRC meetings and the meetings should be conducted as per the calendar. While preparing the Calendar, it should be seen that DCC and DLRC meetings are not held simultaneously.