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Lead Bank Scheme (LBS): RBI Draft Revised Guidelines, Objectives, Structure

Context

RBI has introduced a draft circular on the Lead Bank Scheme, aiming to fine-tune the structure, membership and agenda of various forums created under the Lead Bank Scheme. The draft circular lays down clear roles and responsibilities of key functionaries aiming to further strengthen State Level Banker’s Committee and Lead District Manager offices.

About the Lead Bank Scheme

Lead Bank Scheme was introduced by the Reserve Bank of India (RBI) in 1969 for providing a structured mechanism for facilitating coordination among various stakeholders for:

(i) Enabling flow of bank finance to the priority sector & other sectors for achieving inclusive growth.

(ii) Promoting banks’ role in overall development of the rural sector.

(iii) Deepening financial inclusion through improved access and usage of financial services.

Lead Bank of the District

Designation of Lead Bank

RBI shall designate a commercial bank as Lead Bank in each district.

Lead Bank Manager: 

    • Every Lead Bank shall appoint a Lead District Manager (LDM) in each district where it has been designated as Lead Bank.
    • Lead Banks will appoint officers of appropriate level (preferably mid-management cadre), possessing requisite aptitude & leadership skills as LDMs.
    • Preferably only one district will be assigned to one LDM for adequate focus to credit & financial inclusion. Assigning more than one district to an LDM will be considered only in exceptional cases.
    • Lead Banks will equip LDM offices with dedicated staff, infrastructure & resources for LDMs to discharge their responsibilities effectively.
  • Role of Lead District Managers (LDMs)
    • Convene DCC and DLRC meetings.
    • Monitor implementation of the District Credit Plan (DCP).
    • Hold periodic coordination meetings with DDM, LDO, and Government officials to resolve issues.
    • Facilitate establishment of FLCs and RSETIs by banks.
    • Organize financial literacy camps through FLCs, rural bank branches, and CFLs.
    • Conduct annual sensitization workshops for banks and Government officials (with NGOs/PRIs).
    • Arrange quarterly public meetings for awareness, feedback, and grievance redressal.

Lead District Officer:

RBI to designate one of its officers as Lead District Officer for each district.

District Development Manager

NABARD will appoint a District Development Manager (DDM) in each district to act as a liaison between NABARD & district level banking and financial institutions in the district for:

(i) Promoting rural credit.

(ii) Implementing financial inclusion initiatives

(iii) Supporting agricultural & rural development activities

SLBC Convenor Bank: RBI to designate one commercial bank with significant presence in the State/UT as the State/UT Level Bankers’ Committee (SLBC) Convenor Bank.

Other Forums under the Lead Bank Scheme

The Lead Bank Scheme will function through a three-tier structure in each State/UT.

  • At the Block Level: Block Level Bankers’ Committee (BLBC)
  • At the District Level: District Consultative Committee (DCC) & District Level Review Committee (DLRC)
  • At the State Level: State Level Banker’s Committee.

Each of these fora shall broadly comprise of banks, government agencies and other stakeholders.

Forums at the Block Level

Block Level Bankers’ Committee (BLBC)

BLBC to be constituted in each block of a district.

Functions of Block Level Bankers’ Committee

  • Achieving coordination among credit institutions and field level development agencies at the Block Level.
  • Prepare and review the implementation of the Block Credit Plan. 
  • Resolve operational issues in the implementation of credit programmes at the block level

Composition of Block Level Bankers’ Committee (BLBC)

  • Lead District Manager (LDM) of the district to chair the BLBC.
  • Other Members of BLBC will comprise of:
  • Block Development Officer (BDO)
  • District Development Officer (DDO) of the district.
  • Technical officers in the block such as Extension Officers for Agriculture, industries & cooperatives.
  • Branch managers of all banks operating in the block including Small Finance Banks, Payments Banks, Wholly Owned Subsidiaries of Foreign Banks, Regional Rural Banks, District Central Co-operative Banks.

Meetings of Block Level Bankers’ Committee (BLBC)

  • held at least twice per year. 
    • First half year ended in September for arriving at the potential for preparation of the Block Credit Plan 
    • Other for the half year ended March where the performance may be reviewed. 

Forums at the district level under the lead bank scheme 

District Consultative Committee (DCC):

Functions of DCCs:

  • Act as a forum for co-ordination at the district level to facilitate developmental activities under LBS.
  • Prepare and review implementation of District Credit Plan (DCP) & resolve operational issues in its implementation.

Composition of  District Consultative Committee:

  • District Collector/District Magistrate to be the chairperson of DCC.
  • Other members: Every bank (including lead banks, other banks, government organisations)  in the district. The banks will nominate a District Co-Ordinator (DCO), i.e., a nodal officer at senior level for participating in the DCC meetings. 
  • Director of MSME Development Institute (MSME-DI) in the district shall be an invitee in districts where MSME clusters are located. 

District Level Review Committee (DLRC)

Functions of DLRCs:

  • Devise workable solutions for enhancing flow of credit to deserving sectors.
  • Serving as a platform for Public Representatives to share their feedback

Composition of DLRC

  • Chaired by the DC / DM.
  • Public Representatives, i.e., Local MPs / MLAs / Zilla Panchayat / Parishad Chiefs shall be invited to these meetings.
  • Other members: Representatives of State Minority Commission, the Scheduled Castes / Scheduled Tribes (SC / ST) Corporation, and representatives of the group of beneficiaries of rural lending. 

Forums under the lead bank scheme at the state level- state level banker’s committee (SLBC)

SLBC Convenor Bank: 

RBI to designate one commercial bank with significant presence in the State/UT as the State/UT Level Bankers’ Committee (SLBC) Convenor Bank.

About the State Level Bankers’ Committee

The apex inter-institutional forum to facilitate coordination among State  Government/UT, banks, financial institutions and other stakeholders for development of the State.

Functions of SLBC

  • Focus on policy and strategic issues relating to flow of priority sector credit
  • Overall financial inclusion in the state
  • Monitoring of Gaps in performance of financial institutions 

Composition of SLBC:

  • Co-chairmanship of SLBC: Co-chaired by Chairman/MD/ED of the SLBC Convenor Bank &  Chief Secretary/Additional Chief-Secretary/Principal Secretary of Finance (Head of Finance Department in State Government)/Development Commissioner of the State. 
  • Membership of SLBC: Heads of relevant departments of State/UT Government, Regional Director of RBI, state heads of commercial banks having major presence in the State, state head of NABARD, SLBC Convenor and heads of RRB and state co-operative bank.
  • Invited on a rotational basis: 
    • State heads of Small Finance Banks, Wholly Owned Subsidiary of Foreign Banks, and Payment Banks. 
    • Senior functionaries from the National Commission for SC / ST, the National Horticulture Board, the Khadi and Village Industries Commission (KVIC), industry bodies, retail traders, exporters, farmers’ unions, etc. 
  • The Chief Minister/Minister of Finance /Industries /Agriculture shall be invited to address the SLBC meetings. The state Chief Minister shall be requested to attend at least one SLBC meeting in a year. 

Meetings of SLBC: Conducted every quarter. 

Sub-Committees of SLBC

    • Steering Sub-Committee: Deliberate on agenda proposals from different stakeholders and finalise a compact agenda for the SLBC meetings.
      • Consists of the SLBC Convenor, senior State Government representatives from major departments covering priority sectors, senior representatives from RBI, NABARD, and two to three banks having a major presence.
    • Sub-Committee on Agriculture & Allied Activities (SC-AA): Shall be chaired by a SLBC/UTLBC core member bank with highest share in agriculture lending/Agriculture Commissioner/Senior Representative of the Agriculture Department of the State.
  • Sub-Committee on MSME & Other Priority Sector (SC-MSME & OPS):
  • Sub-Committee on Financial Inclusion & Financial Literacy (SC-FIFL): 
  • Sub-Committee on Digital Payments (SC-DP): Chaired by SLBC Convenor or Zonal head of a major bank in the State. 

Other features of lead bank scheme

Credit Planning under Lead Bank Scheme

  • Bottom-Up Credit Planning: Credit planning under LBS follows a block/activity-wise approach. District Development Manager (DDM) prepares Potential Linked Credit Plan (PLP) based on district potential, infrastructure, and government priorities; PLP is finalized by August after a pre-PLP meeting convened by the Lead District Managers (LDMs).
  • Preparation of Credit Plans: Banks prepare Branch Credit Plans (BCP) based on PLP estimates. BCPs are aggregated into Block Credit Plans (via BLBC) and then consolidated by Lead District Manager into the District Credit Plan (DCP), ensuring plans are realistic yet aspirational.
  • Approval & State-Level Integration: The District Credit Plan is approved by the District Consultative Committee (DCC) and aggregated at the state level into the Annual Credit Plan (ACP) by the SLBC, launched by 1st April each year. Banks align internal business plans with the ACP.
  • Performance Review Mechanism: Performance against credit plans is reviewed at:
  • Block Level – BLBC
  • District Level – DCC & DLRC
  • State Level – SLBC
  • Monitoring & Reporting: Banks submit ACP targets, achievements, and outstanding data through the LBS-MIS format. Quarterly bank-wise performance statements are reviewed in DCC/SLBC meetings, focusing on disbursements vis-à-vis allocated targets.

Monitoring of Credit-Deposit Ratio

  • Meaning & Calculation:  CD Ratio = Outstanding Credit ÷ Deposits. 
  • Monitored at Bank (HO), State (SLBC) and District levels; district-level credit includes loans sanctioned elsewhere but utilised in the district.
  • Bank-Level Norm: Banks must maintain a minimum 60% CD Ratio for rural & semi-urban branches (All-India basis) and reduce regional imbalances.
  • Monitoring Mechanism of CD Ratio at District Level:
    • CD Ratio 40–60%: Reviewed by DCC.
    • CR Ratio <40% + ACP <100%:  SSC (LDM-led) formed → prepares MAP → progress reviewed in DCC.
    • CD Ratio <20% (Special Category): SSC + MAP + State Govt (infrastructure support) + Banks (boost credit) → Progress reported to HO & SLBC.

Service Area Approach (SAA)

Service Area Approach (SAA)

  • Introduced in 1989 with the following objectives:
    • Planned & orderly development of rural and semi-urban areas by increasing productive lending.
    • Forging effective linkages between bank credit, productivity and enhanced income levels.
  • Under this, each bank branch in a rural and semi-urban area is designated to serve 15 to 25 villages and meet the needs of bank credit of its service area. However, banks can also serve customers outside their service area also.
  • Banks dispense with the requirement of obtaining a ‘No Due Certificate’ from individual borrowers (including SHGs & JLGs) for all types of loans, including Government loans, unless the scheme provides for obtaining of ‘No Due Certificate’.
  • Banks may use an alternative framework of due diligence to promote credit in rural and semi-urban areas which can be based on:
    • Credit history check through Credit Information Companies.
    • Self-declaration or affidavit from the borrower.
    • CERSAI registration.
    • Peer monitoring.
    • Information sharing among lenders.
    • Information search.

Unbanked Rural Centres (URCs)

  • SLBC Convenor Banks will identify all unbanked rural centres (URCs) in the State. This list will be made available to banks to enable them to open new branches in unbanked rural centres.
  • At least 25% of new banking outlets to be opened in Tier 5 & 6 centres; priority to villages (pop. >5000) with no banking outlet, ensuring CBS-enabled outlets.
  • Coverage of URCs reviewed in DCC & SLBC meetings; banks must update RBI’s CISBI portal. SLBCs to implement and monitor action plans under NSFI 2025–30.

Expanding & Deepening Digital Payments Ecosystem (EDDPE):

  • Aim: Enable every individual in identified districts to make/receive safe, secure, quick, and affordable digital payments.
  • SLBCs/UTLBCs must cover all districts, set timelines, and closely monitor progress.

Capacity Building & Sensitization

  • RBI + SLBC: Sensitise DCs/DMs, Zilla Parishad CEOs, BDOs, and govt. officials on LBS.
  • Lead Banks: Train bank officials.
  • RBI Regional Offices: Conduct annual capacity-building programmes for LDOs, LDMs, DDMs.


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