RBI introduced Lead Bank scheme in 1969, on the basis of recommendations of D.R.Gadgil study group. The study group suggested adaption of ‘area approach’ for adequate banking facilities in rural area. The scheme envisages every district across the country shall be assigned to a commercial bank which has major presence in that district to perform the role of Lead Bank. The assignment of lead bank responsibility to designated banks in every district is done by Reserve Bank of India under a procedure formulated under the scheme. As on June 30, 2017, 25 public sector banks and one private sector bank has been assigned lead bank responsibility in 706 districts of the country which includes metropolitan areas.
The leader bank initially conducts basic surveys in their respective lead districts and prepares district credit plans linked with the development programme with special emphasis on the development of rural and backward area. It would identify the places suitable for branch expansion at unbanked centers with emphasis on deposit mobilization and credit deployment.
It is obligatory on the part of all the commercial banks to achieve a credit deposit ratio of 60% in respect of their rural and semi-urban branches separately on an all-India basis. However, they have to take care that wide disparity in the ratios between different States / Regions is avoided in order to minimise regional imbalance in credit deployment. As an agenda item, Lead Banks review performance of banks under respective District Credit Plan (DCP). The DCP comprises flow of credit to priority sector and weaker sections of the society, assistance under Government sponsored schemes, Grant of educational loans, Progress under SHG – bank linkage, SME financing & bottlenecks thereof, if any etc.
SHG – bank linkage
Further, the lead banks in their respective forum like Block Level Bankers’ Committee (BLBC), District Consultative Committee (DCC), State Level Bankers’ Committee (SLBC), discuss the problem in all aspects of SHG-bank linkage with the other financial institutions. For example, in the Block level Bankers Committee (BLBC), all the financial institutions of the Block level meet once in a quarter and take up issues of SHG bank linkage at the block level. In this Committee, the SHGs/ Federations of the SHGs are also included as members. The committee monitors branch wise achievement of SHG credit status.
The State Level Bankers’ Committee (SLBC)/Union Territory Level Bankers’ Committee (UTLBC) coordinate the activities of the financial institutions and Government departments in the State/Union Territory under the Lead Bank Scheme. For SHG-bank linkage, SLBCs will have a sub-committee consisting members from all banks operating in the State, RBI, NABARD, CEO of SRLM, representatives of State Rural Development Department, Secretary-Institutional Finance and Representatives of Development Departments etc. The sub- committee shall meet once in a month with a specific agenda of review, implementation and monitoring of the SHG-Bank linkage and the issues/ constraints in achievement of the credit target.