The RBI on Friday proposed revised guidelines for the Lead Bank Scheme (LBS) to streamline operational aspects and further enhance the effectiveness of the programme, which was introduced in 1969 for coordinating development activities at the district level. LBS aims at coordinating the activities of banks, government and other developmental agencies through fora established under the scheme to enhance the flow of credit to priority sectors for inclusive growth and deepening financial inclusion. The proposed guidelines aim to fine-tune the objectives of the scheme — the structure, membership and agenda of various fora; clear delineation of roles and responsibilities of key functionaries; and provisions to further strengthen the State Level Bankers’ Committee (SLBC) and Lead District Manager offices, among others. ”The RBI shall designate a commercial bank as Lead Bank in each district, to coordinate the efforts of the credit institutions, Government, and other stakeholders to improve credit flow to the priority sectors and promote financial inclusion in the district,” said the draft circular on Lead Bank Scheme (LBS). SLBC Convenor Banks would coordinate the activities of all banks in the state, and regularly discuss with state government officials the operational problems in lending, while extending necessary support for banking development and to achieve the objective of greater financial inclusion, it added. The convenor banks should take up with the state governments / other government departments concerned, impediments, if any, such as issues of road / digital connectivity, conducive law and order situation, uninterrupted power supply, adequate security, to ensure adequate banking coverage and achieve greater financial inclusion. ”Under LBS, a bottom-up approach is envisaged for credit planning. Block-wise /Activity-wise potential shall be estimated for various sectors, so as to prepare credit plans accordingly,” the draft said. As the Credit Deposit Ratio (CD Ratio) is an important parameter of credit disbursed in relation to deposits mobilised in the area, it should be monitored at different levels, the draft said while prescribing certain parameters. Banks are required to achieve a CD Ratio of 60 per cent in respect of their rural and semi-urban branches, taken together on an All-India basis. The central bank has invited comments/feedback on the draft circular by March 6, 2026.
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