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What is Lead Bank Scheme?

Reserve Bank of India (RBI) administers the Lead Bank Scheme (LBS).

What is Lead Bank Scheme (LBS)?

The Lead Bank Scheme (LBS) 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 the priority sector and other sectors and to promote banks' role in the overall development of the rural sector. 

The LBS has been extended to the districts in the metropolitan areas, thus bringing the entire country under the fold of the LBS.

The LBS is administered by Reserve Bank of India (RBI).

Who is Lead Bank?

The designated banks in every district are assigned the ‘Lead Bank’ responsibility of the district by RBI. The Lead Bank is expected to assume a leadership role for coordinating the efforts of the credit institutions and the Government.

As on March 31, 2025, 12 public sector banks and 2 private sector banks (Jammu & Kashmir Bank and ICICI Bank) have been assigned Lead Bank responsibility in 782 districts of the country. (Updated on April 01, 2025)

Which committees are formed under LBS?

The following committees are formed under LBS –

  1. Block Level Bankers’ Committee (BLBC)
  2. District Consultative Committee (DCC)
  3. District Level Review Committee (DLRC)
  4. State Level Bankers’ Committee (SLBC)

Block Level Bankers’ Committee (BLBC)

  • BLBC is a forum for achieving coordination between credit institutions and field level development agencies at the block level. 
  • Lead District Manager (LDM) of the district is the Chairman of BLBC. 
  • All the banks operating in the block are members of BLBC. 
  • BLBC meetings are held at quarterly intervals. 

District Consultative Committee (DCC)

  • DCC is a forum at the district level for bankers as well as Government agencies / departments to facilitate coordination in implementing various developmental activities under the LBS. 
  • The District Collector is the Chairman of the DCC meetings. 
  • RBI, National Bank for Agricultural and Rural Development (NABARD) and all banks are the members of the DCC. 
  • Lead District Officer (LDO) represents RBI as a member of the DCC. 
  • Lead District Manager (LDM) convenes the DCC meetings. 
  • DCC meetings should be convened by the Lead Banks at quarterly intervals.

District Level Review Committee (DLRC)

  • DLRC meetings are chaired by the District Collector and attended by members of the District Consultative Committee (DCC). 
  • Public Representatives i.e. Local MPs / MLAs / Zilla Parishad Chiefs are also invited to these meetings. 
  • The forum may also have representatives of State Minority Commission, SC / ST Corporation and representatives of the group of beneficiaries of rural lending. 
  • The forum may also consider inviting people with the expertise in the fields, such as progressive farmers and local industrialists as special invitees.
  • DLRC meetings should be convened by the Lead Banks at least once in a quarter.

State Level Bankers’ Committee (SLBC)

  • SLBC is an apex inter-institutional forum to create adequate coordination machinery in all States, on a uniform basis for development of the State. 
  • SLBC is chaired by the Chairman / Managing Director / Executive Director of the Convenor Bank. 
  • The meetings are co-chaired by the Additional Chief Secretary or Development Commissioner of the State concerned. 
  • In cases where the Managing Director / Chief Executive Officer / Executive Director of the SLBC Convenor Bank is unable to attend SLBC Meetings, the Regional Director / General Manager (officer-in-charge) of the RBI shall co-chair the meetings along with the Additional Chief Secretary / Development Commissioner of the State concerned. 
  • SLBC comprises representatives of banks, RBI, NABARD, heads of Government departments and representatives of financial institutions operating in a State. 
  • Representatives of various organizations from different sectors of the economy like industry bodies, retail traders, exporters, farmers’ unions, etc. are special invitees in the SLBC meetings for discussing their specific problems, if any. 
  • SLBC Convenor Bank of the State should hold the SLBC meetings on quarterly basis. 
  • SLBC to constitute Steering Sub-committee / Sub-committee for examining the specific issues relating to agriculture, micro, small / medium industries / enterprises, handloom finance, export promotion and financial inclusion, etc. 
  • As on March 31, 2025, the State Level Bankers’ Committee (SLBC) / Union Territory Level Bankers' Committee (UTLBC) convenorship of 28 States and 8 Union Territories has been assigned to 11 public sector banks and one private sector bank. (Updated on April 01, 2025)

What activities to be undertaken by SLBC / UTLBC for financial inclusion?

  • SLBC Convenor Banks / Lead Banks shall focus attention on the need for achieving 100% financial inclusion through penetration of banking services in the rural areas. 
  • SLBC Convenor Banks shall identify villages with population above 5000 without a bank branch of a scheduled commercial bank in their State and allot these villages among scheduled commercial banks (including RRBs) for opening of branches.
  • SLBC Convenor Banks shall identify all unbanked rural centres (URCs) in the State, compile and maintain an updated list of all such centres. The updated list should be displayed on the website of each SLBC to facilitate banks to choose / indicate the place / centre where they wish to open a ‘banking outlet’.
  • SLBC Convenor Banks have been advised that in order to comply with the criteria of opening at least 25% of the total banking outlets in unbanked rural centres in Tier 5 & 6 centres, banks should give priority to villages without a banking outlet having population more than 5000 (i.e. Tier 5 centres) and ensure that all such villages under their jurisdiction are covered with a CBS-enabled Banking Outlet on priority basis.
  • National Strategy for Financial Inclusion (NSFI): 2019-2024 – SLBC / UTLBC Convenor banks have been advised to review the presence of banking outlets of Scheduled Commercial Banks (SCBs), Regional Rural Banks (RRBs), Small Finance Banks (SFBs) and Payments Banks (PBs) in every village within a 5 KM radius / hamlet of 500 households in hilly areas under their jurisdictions and ensure that universal access to financial services are provided to all such villages.

What is Service Area Approach (SAA)?

  • SAA introduced in April 1989 for planned and orderly development of rural and semi-urban areas was applicable to all scheduled commercial banks including RRBs. 
  • Under SAA, each bank branch in a rural or semi-urban area was designated to serve an area of 15 to 25 villages and the branch was responsible for meeting the needs of bank credit of its service area. 
  • SAA scheme was reviewed in December 2004 and it was decided to dispense with the restrictive provisions of the scheme while retaining the positive features of the SAA such as credit planning and monitoring of the credit purveyance. 
  • Accordingly, under SAA, the allocation of villages among the rural and semi-urban branches of banks were made not applicable for lending except under Government Sponsored Schemes. 
  • Thus, while the commercial banks and RRBs are free to lend in any rural and semi-urban area, the borrowers have the choice of approaching any branch for their credit requirements.


References

Reserve Bank of India. (2022, April 01). 'Master Circular – Lead Bank Scheme'. Retrieved from https://www.rbi.org.in/Scripts/BS_ViewMasCirculardetails.aspx?id=12277

Reserve Bank of India. (2025, April 01). 'Master Circular – Lead Bank Scheme'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12808&Mode=0


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