The RBI has issued a new circular on Lead Bank Scheme. The Lead Bank Scheme (LBS) was introduced by the Reserve Bank of India (RBI) in December 1969. The scheme was launched to create a proper system for coordination among banks, government departments, NABARD, and other development agencies. Its main purpose is to ensure that bank credit reaches priority sectors and to strengthen the role of banks in the overall development of rural areas. The new guidelines are as follows:
Objectives of the Lead Bank Scheme
The Lead Bank Scheme aims to bring together banks, government agencies, and development institutions to achieve two major goals. First, it seeks to increase the flow of credit to priority sectors such as agriculture, small businesses, and weaker sections of society to support inclusive economic growth. Second, it promotes financial inclusion by improving people’s access to banking and financial services and encouraging their use.
Framework of the Scheme
Lead Bank
The RBI appoints one commercial bank as the Lead Bank for each district. The Lead Bank is responsible for coordinating the activities of banks, government departments, NABARD, and other stakeholders at the district level. Its main role is to improve the flow of credit to priority sectors and promote financial inclusion within the district.
Lead District Manager (LDM)
Each Lead Bank appoints a Lead District Manager (LDM) in every district where it has lead bank responsibility. The LDM is responsible for supervising and coordinating the implementation of the Lead Bank Scheme in the district.
District Development Manager (DDM)
NABARD appoints a District Development Manager (DDM) for every district. The DDM acts as a link between NABARD and district-level banking institutions. The officer helps promote rural credit, financial inclusion, agricultural development, and other rural development activities.
Lead District Officer (LDO)
The RBI appoints a Lead District Officer (LDO) for each district. The LDO represents RBI at the district level and participates in the implementation and monitoring of the Lead Bank Scheme.
SLBC Convenor Bank
At the state level, RBI designates one commercial bank with a significant presence in the State or Union Territory as the State Level Bankers’ Committee (SLBC) Convenor Bank or Union Territory Level Bankers’ Committee (UTLBC) Convenor Bank. This bank is responsible for coordinating banking activities at the state level.
SLBC Convenor
The SLBC Convenor Bank appoints a General Manager as the SLBC Convenor. If a General Manager is not available, a Zonal Head of the bank, not below the rank of Deputy General Manager (DGM), may be appointed as the Convenor. The Convenor is responsible for coordinating and managing the activities of the SLBC.
Fora under the Lead Bank Scheme
The Lead Bank Scheme works through a three-tier structure. At the lowest level is the Block Level Bankers’ Committee (BLBC), which functions at the block level. At the district level, there are the District Consultative Committee (DCC) and District Level Review Committee (DLRC), which review banking and development activities in the district. At the highest level is the State Level Bankers’ Committee (SLBC) or Union Territory Level Bankers’ Committee (UTLBC), which coordinates banking and development activities across the entire state or union territory.
These committees include representatives from banks, government departments, NABARD, RBI, and other stakeholders. They work together to improve credit delivery, financial inclusion, and overall economic development.
Click here to download RBI new Circular on Lead Bank Scheme
