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The history of Lead Bank Scheme (LBS) can be traced back to October 1969, when a study group headed by Prof. DR Gadgil submitted its report on Organizational Framework for the Implementation of the Social Objectives. The study group found that Commercial Banks did not have adequate presence in the rural areas; moreover, they also lacked the required orientation. As a solution to this issue, the Study Group suggested the adoption of an ‘Area Approach’ to develop plans and programs for the development of adequate banking and credit structure in rural areas.
This idea of ‘Area Approach’ suggested by the Study Group was endorsed by the Reserve Bank of India (RBI) with all seriousness and appointed a Committee of Bankers on Branch Expansion Programme of public sector banks. The Committee suggested, for enabling Public Sector Banks to discharge their social responsibilities, each Bank should lay its focus on certain districts where it should act as a ‘Lead Bank’. Following the recommendations given by the Committee, RBI introduced the Lead Bank Scheme in December 1969.
Table of Contents
The main objectives of ‘Lead Bank Scheme’ are as follows:
The State Level Banker’s Committee (SLBC) was constituted in April 1977, to create adequate co-ordination machinery in all States, on a uniform basis for the development of the State. SLBC is chaired by the Managing Director (MD) of the Convener Bank. The Committee comprises representatives of commercial banks including Small Finance Banks, RBI, NABARD, heads of government departments, etc.
SLBCs play a vital role in the development of the State, and their meetings are held regularly at a quarterly basis.
The following agendas are to be discussed in SLBC meetings:
Other than the agendas mentioned above, the State Level Banker’s Committee (SLBC) can include any other agenda item considered necessary.
RBI has advised SLBC Convener Banks to prepare a yearly calendar of programmes at the start of the year for conducting the meetings. This advisory has been put out by RBI to improve the effectiveness and streamline the functioning of SLBC meetings. The main objective of preparing the calendar of meetings at the beginning of the year is to ensure the adequate notice of these meetings and timely compilation and dispatch of agenda papers to all stakeholders.
The table below mentions the broad guidelines that should be used to prepare the calendar of programmes:
Preparation of credit plans
For the successful implementation of the Lead Bank Scheme, it is important to plan credit plans by identifying block-wise/ activity-wise potential estimated for various sectors.
Potential Linked Credit Plans (PLPs)
PLPs are a step towards decentralized credit planning with the basic objective of mapping the existing potential for development through bank credit. PLPs are expected to emphasize the promotion of sustainable agricultural practices suitable to local conditions.
While preparing PLPs, the focus must be on identifying processes and projects that:
The credit plans performance is reviewed in various for created under the Lead Bank Scheme as given below:
DBT was introduced out by the Government of India in selected districts in January 2013 and was further expanded into other districts. Banks are advised to co-ordinate with the government authorities to roll out DBT. It is advised for Banks to include the status of roll-out of DBT as a regular agenda of discussion in SLBC meetings.
Further, to make disbursements at doorsteps through ICT based BC model, banks have been advised to:
The Government of India aims at achieving its objective of doubling the farmer’s income by 2022. The government has taken various steps to achieve this objective, such as setting up an inter-ministerial committee to prepare a blueprint for the same. Lead Bank Scheme, which makes sure the interdepartmental/governmental co-ordination in the financial sector, is expected to take further the objective of doubling farmer’s income by 2022.
Lead banks are advised to ensure that:
With a view to expanding the digital payments ecosystem, the SLBCs are advised to identify one district in their respective states on a pilot basis to make the district 100% digitally-enabled within one year. This step aims at enabling every individual in the district to make/receive payments digitally safely and conveniently.
Varun Hariharan has completed the Legal Practice Course from BPP Law School, Manchester. He has a Masters in Commercial and Corporate Law from the Queen Mary University of London and LLB Honours from Bangor University, UK. He specialises in law related to corporate, artificial intelligence and technology law.
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