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Lead Bank Scheme

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The Lead Bank Scheme was introduced in 1969 to provide lead roles to individual banks (both in public sector and private sector) for the districts allotted to them.
The Lead Bank Scheme was introduced by RBI on the basis of the recommendations of both the Gadgil Study Group and Banker’s Committee (Nariman Committee). The studies by the committees found that the rural areas were not able to enjoy the benefits of banking.  Commercial banks did not have adequate presence in rural areas and also lacked the required rural orientation.
So a bank (public or private) was given some area in which that bank had to play a lead role in providing financial services to the people, making them aware about the banks and various benefits of banks and also generating trust among people so that they deposit their money without any fear of loss or fraud.
So in this way, all the districts in the country were allotted various banks.
The lead bank also acts as a leader for coordination activities and services of all financial institutions in that area.
For this purpose, a Lead Bank Officer (LBO) now designated as Lead District Manager was also appointed.

Role of Lead District Manager:

  • Collection of various data from Scheduled Commercial Banks, Regional Rural Banks, Co-operative Banks, other banks and various government agencies.
  • Monitoring the implementation of Annual Credit plan and various Government Sponsored Schemes in the district.
  • Along with implementation of Annual Credit plan, he should also provide requisite infrastructure to achieve the plan effectively.
  • He should also play a leading role in poverty alleviation programmes launched by the State/Central Government.
  • Preparation of Annual Credit Plan for the district.
Usha Thorat Committee on LBS:

In 2009, Government of India constituted a High-Power Committee headed by Mrs Usha Thorat, former Deputy Governor of the RBI, to suggest reforms in the LBS. The task of this penal was to recommend steps to revitalize the LBS, given the challenges facing the banking sector, especially in an era of increasing privatization and autonomy. It gave the following recommendations:

  • The committee recommended the enhancing of the scope of the scheme.
  • It suggests a sharper focus on facilitating financial inclusion rather than going for a mere review of the government sponsored credit schemes.
  • LBS should be continued to accelerate financial inclusion in the unbanked areas of the country.
  • Private sector banks should be given a greater role in LBS action plans, particularly in areas of their presence.
  • Enhance the business correspondent model, making banking services available in all villages having a population of above 2,000, and relaxation in KYC (know your customer) norms for small value accounts.

Thus, we see that the lead bank scheme (LBS) has a focus on financial inclusion. It assumes enhanced significance in the light of the recent developments in the banking sector. The Usha Thorat committee favoured the further continuance and revitalization of the scheme for the sake of the financial inclusion in the country.


In all the states, State Level Bankers’ Committees (SLBC) are formed in order to coordinate and implement programmes and policies by all the financial institutions operating in the State. The meetings of SLBC are held quarterly in which there is interaction among the various banks in the State on the one hand and between the banks and the State Government authorities on the other.