Reserve Bank of India
RBI/2022-23/11
FIDD.CO.LBS.BC.No.02/02.01.001/2022-23
April 01, 2022
The Chairman/ Managing Director/ Chief Executive Officer
SLBC/ UTLBC Convenor Banks / Lead Banks
Madam/ Dear Sir,
Master Circular – Lead Bank Scheme
The Reserve Bank of India has issued a number of guidelines/instructions on Lead Bank Scheme from time to time. This Master Circular consolidates the relevant guidelines/ instructions issued by Reserve Bank of India on Lead Bank Scheme up to March 31, 2022 as listed in the Appendix I.
2. This Master Circular has been placed on the RBI website https://www.rbi.org.in
Yours faithfully,
(Sonali Sen Gupta)
Chief General Manager-in-Charge
Encl.: As above
Structure
| 1 | Introduction |
| 2 | Fora under Lead Bank Scheme |
| 2.1 | Block Level Bankers’ Committee |
| 2.2 | District Consultative Committee (DCC) |
| 2.2.1 | Constitution of DCC |
| 2.2.2 | Conduct of DCC Meetings |
| 2.2.3 | Agenda for DCC Meetings |
| 2.2.4 | Role of LDMs |
| 2.2.5 | Quarterly Public Meeting and Grievance Redressal |
| 2.2.6 | District Level Review Committee (DLRC) Meetings |
| 2.2.7 | DCC/DLRC meetings – Annual Calendar of Meetings |
| 2.3 | State Level Bankers’ Committee (SLBC) |
| 2.3.1 | Constitution of SLBC |
| 2.3.2 | Conduct of SLBC Meetings |
| 2.3.3 | Revised Agenda for SLBC Meetings |
| 2.3.4 | SLBC – Yearly Calendar of Meetings |
| 2.3.5 | SLBC Website – Standardization of information/data |
| 2.3.6 | Liaison with State Government |
| 2.3.7 | Capacity Building/Training/Sensitization Programmes |
| 3 | Implementation of Lead Bank Scheme |
| 3.1 | Preparation of credit plans |
| 3.2 | Potential Linked Credit Plans (PLPs) |
| 3.3 | Monitoring the performance of credit plans |
| 3.4 | Revised mechanism of Data Flow for LBS fora meetings |
| 4 | Assignment of Lead Bank Responsibility |
| 5 | Banking Penetration |
| 5.1 | Roadmap for provision of banking services in unbanked villages |
| 5.2 | Roadmap for opening brick and mortar branches in villages with population more than 5000 without a bank branch of a scheduled commercial bank |
| 5.3 | Aligning roadmap for unbanked villages having population more than 5000 with revised guidelines on Branch Authorisation Policy |
| 5.4 | National Strategy for Financial Inclusion (NSFI): 2019-2024 – Universal Access to Financial Services |
| 6 | Credit Deposit Ratio |
| 6.1 | CD Ratio of banks in Rural and Semi-Urban Areas |
| 6.2 | Implementation of the recommendations of Expert Group on CD Ratio |
| 7 | Direct Benefit Transfer |
| 8 | Service Area Approach (SAA) |
| 8.1 | Dispensing with ‘No Due Certificate’ |
| 9 | Doubling of Farmers’ Income by 2022 |
| 10 | Expanding and Deepening of Digital Payments Ecosystem |
Introduction
(i) The genesis of the 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 the Implementa-tion 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 ad-equate banking and credit structure in the rural areas.
(ii) A Committee of Bankers on Branch Expansion Programme of Public Sector Banks appoint-ed by the Reserve Bank of India under the Chairmanship of Shri F. K. F. Nariman (Nariman Committee) endorsed the idea of an ‘Area Approach’ in its report (November 1969), recom-mending 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’.
(iii) Pursuant to the above recommendations, the Lead Bank Scheme was introduced by the Re-serve 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 en-hancing 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. For coordinating the activities in the district, a particular bank is assigned ‘Lead Bank’ responsibility of the district. The Lead Bank is expected to assume a leadership role for coordinating the efforts of the credit institutions and the Gov-ernment.
(iv) 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, former Deputy Governor of the Reserve Bank of India in 2009.
(v) 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 ex-pansion, deposit mobilisation and lending to the priority sector, especially in rural/semi urban areas. There was overwhelming consensus that the Scheme needs to continue. Based on the recommendations of the Committee, the guidelines were issued to SLBC Convenor banks and Lead Banks for implementation.
(vi) Envisaging greater role for private sector banks, Lead Banks were advised to ensure that private sector banks are more closely and actively involved in the implementation of the Lead Bank Scheme, by leveraging on Information Technology and bringing in their expertise in stra-tegic planning. They were also advised to involve themselves in the preparation as well as im-plementation of the District Credit Plan(DCP).
(vii) Further, Reserve Bank of India constituted a “Committee of Executive Directors” of the Bank to study the efficacy of the Scheme and suggest measures for its improvement. Based on the Committee’s recommendations and feedback received from various stakeholders, certain ‘action points’ were issued to SLBC Convenors/Lead Banks and NABARD on April 6, 2018.
2. Fora under Lead Bank Scheme
2.1 Block Level Bankers’ Committee (BLBC)
Block Level Bankers’ Committee (BLBC) is a forum for achieving coordination between credit institutions and field level development agencies at the block level. The forum prepares and re-views the implementation of the Block Credit Plan and also resolves operational problems in the implementation of the credit programmes of banks. The Lead District Manager (LDM) of the district is the Chairman of the Block Level Bankers’ Committee. All the banks operating in the block including the Small Finance Banks, Wholly Owned Subsidiaries (WOS) of Foreign Banks, RRBs, the District Central Cooperative Banks, Block Development Officer, technical officers in the block, such as extension officers for agriculture, industries and co-operatives are mem-bers of the Committee. BLBC meetings are held at quarterly intervals. To strengthen the BLBC forum which operates at the base level of the Lead Bank Scheme, it is necessary that all branch managers attend BLBC meetings and enrich the discussions with their valuable inputs. Control-ling Heads of banks may also attend a few of the BLBC meetings selectively. Participation by the District Development Manager (DDM) of NABARD in BLBCs would ensure better and more meaningful discussions for the development of the Block. Therefore, NABARD has been advised that DDMs should attend all Block Level Bankers’ Committee meetings in their districts and actively participate in the credit planning exercise and review meetings at the block level. The Lead District Officer (LDO) of the Reserve Bank of India (RBI) selectively attends the BLBC meetings. The repre-sentatives 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. Payments Banks should also be invited to attend the meetings.
2.2 District Consultative Committee (DCC)
2.2.1 Constitution of DCC
The District Consultative Committees were constituted in the early seventies as a common fo-rum at the 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 including Small Finance Banks, Wholly Owned Subsidiaries (WOS) of Foreign Banks, RRBs, Payments Banks, Co-operative banks including the District Central Coop-erative Bank (DCCB), various State Government departments and allied agencies are the mem-bers of the DCC. The Lead District Officer (LDO) represents the Reserve Bank as a member of the DCC. The Lead District Manager (LDM) convenes the DCC meetings. The Director of Mi-cro, Small and Medium Enterprises Development Institute (MSME-DI) in the district is an invitee in districts where MSME clusters are located to discuss issues concerning MSMEs.
2.2.2 Conduct of DCC Meetings
i) DCC meetings should be convened by the Lead Banks at quarterly intervals.
ii) At the DCC level, sub-committees as appropriate, may be set up to work intensively on spe-cific issues and submit reports to the DCC for its consideration.
iii) DCC should give adequate feedback to the SLBC on various issues that need to be discussed on a wider platform, so that these receive adequate attention at the State Level.
2.2.3 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 in-variably discuss in the fora are as under:
i) Review of progress under Financial Inclusion Plan (FIP).
ii) The specific issues inhibiting and enabling IT enabled financial inclusion
iii) Issues to facilitate ‘enablers’ and remove/minimise ‘impeders’ for banking development for inclusive growth
iv) 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.
v) Scaling up financial literacy efforts to achieve financial inclusion.
vi) Review of performance of banks under District Credit Plan (DCP)
vii) Flow of credit to priority sector and weaker sections of the society
viii) Doubling of Farmers’ Income by 2022
ix) Assistance under Government sponsored schemes
x) Grant of educational loans
xi) Progress under SHG – bank linkage
xii) SME financing & bottlenecks thereof, if any
xiii) Timely submission of data by banks
xiv) 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 consid-ered necessary.
# Rural Self Employment Training Institutes (RSETIs) should be more actively involved and monitored at various fora of LBS particularly at the DCC level. Focus should be on develop-ment of skills to enhance the credit absorption capacity in the area and renewing the training programmes towards sustainable micro enterprises. RSETIs should design specific programmes for each district/ block, keeping in view the skill mapping and the potential of the region for necessary skill training and skill up gradation of the rural youth in the district.
2.2.4 Role of LDMs
As the effectiveness of the Lead Bank Scheme depends on the dynamism of the District Collec-tors and the Lead District Managers (LDMs), with the support of the Regional/Zonal Office, the office of LDM should be sufficiently strengthened with appropriate infrastructural support. Apart from the provision of a separate office space, technical infrastructure like computers, printer, data connectivity, etc. which are basic necessities for LDMs to discharge their core re-sponsibilities may be provided to LDMs’ Office without exception. Officers of appropriate lev-el, attitude and possessing requisite leadership skills should be posted as LDMs. Additionally, it is suggested that a dedicated vehicle may be provided to LDMs’ to facilitate closer liaison with the bank officials, district administration officials as also to organise/ attend various financial literacy initiatives and meetings. The absence of a specialist officer/assistant for data en-try/analysis is a common and major issue faced by LDMs. Liberty to hire the services of skilled computer operator may be given to the LDMs to overcome the shortage of staff/ in case appro-priate staff is not posted at LDM office. Further, for successful functioning of the Lead Bank Scheme, we expect Lead Banks to go the extra mile to provide facilities over and above the bare minimum to these critical field functionaries. 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:
i) Monitoring the implementation of the District Credit Plan
ii) Associate with the setting up of Financial Literacy Centres (FLCs), RSETIs by banks
iii) Associate with organizing financial literacy camps by FLCs and rural branches of banks.
iv) Holding annual sensitisation workshops for banks and Government officials with participa-tion by NGOs/Panchayati Raj Institutions (PRIs).
v) Arranging for quarterly awareness and feedback public meetings, grievance redressal etc.
2.2.5 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.
2.2.6 District Level Review Committee (DLRC) Meetings
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 DLRC meetings should be convened by the Lead Banks at least once in a quarter. The DLRC is a forum to review the pace and quality of the im-plementation of various programmes under the Lead Bank Scheme in the district. Hence, asso-ciation of non-officials is considered useful. Public representatives (MPs/ MLAs / Zilla Pancha-yat Chiefs) shall invariably be invited to DLRC meetings. 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., to invite and involve them in all functions conducted by the banks in their districts, such as opening of new banking outlets, 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 forum may also have representatives of State Mi-nority 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. The follow up of the DLRC’s de-cisions is required to be discussed in the DCC meetings.
A compendium of instructions outlining the salient features of DLRC forum is given at Annex V.
2.2.7 DCC/DLRC meetings- Annual Calendar of Meetings
i) DCC and DLRC are the important fora facilitating coordination among commercial banks, Government agencies and others at the district level to review and find solutions to the problems hindering developmental activities. Therefore, it is necessary that all the members participate and deliberate in these 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.
ii) Lead Banks have, therefore, been advised to prepare an 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 the 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 ensured that DCC and DLRC meetings are not held simultaneously. Lead Banks must fix dates of DLRC meetings taking into account the convenience of the MPs and circulate the agenda pa-pers to MPs well in advance.
2.3 State Level Bankers’ Committee (SLBC)
2.3.1 Constitution of SLBC
i) The State Level Bankers’ Committee (SLBC) was constituted in April 1977, as 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. It comprises representatives of commercial banks including Small Finance Banks, Wholly Owned Subsidiaries (WOS) of Foreign Banks, RRBs, Payments Banks, State Cooperative Banks, RBI, NABARD, heads of Government departments including representatives from National Commission for Scheduled Castes/Tribes, National Horticulture Board, Khadi & Village Industries Commission etc. and representatives of financial institu-tions operating in a State, who come together and sort out coordination problems at the policy implementation level. 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 meetings are held on quarterly basis. The responsibility for convening the SLBC meetings would be of the SLBC Convenor Bank of the State.
ii) Recognising that SLBCs, primarily as a committee of bankers at the State level, play an important role in the development of the State, illustrative guidelines on the conduct of State Level Bankers’ Committee meetings have been issued.
