Background
The Lead Bank Scheme was introduced in 1969 on the basis of recommendations of the Gadgil Study Group on the organisational framework for implementation of social objectives in banking.
It was launched by the Reserve Bank of India to promote financial inclusion and coordinated banking development at the district level.
Objective
- To ensure adequate banking and credit facilities in every district.
- To achieve balanced regional development.
- To extend institutional credit to priority sectors, especially agriculture, MSMEs and weaker sections.
Concept
- One commercial bank is designated as the “Lead Bank” for each district.
- The Lead Bank acts as a consortium leader and coordinates the efforts of all banks and financial institutions operating in the district.
Key Functions of Lead Bank
District Credit Planning
- Prepare District Credit Plans (DCP) in line with district development priorities.
- Assess credit gaps and identify unbanked areas.
Coordination
- Convene District Level Bankers’ Committee (DLBC) meetings.
- Ensure coordination among banks, state government departments and development agencies.
Financial Inclusion
- Monitor opening of bank branches in unbanked rural centres.
- Promote schemes such as PMJDY, SHG-Bank linkage and digital banking initiatives.
Monitoring and Review
- Track priority sector lending targets.
- Review implementation of government-sponsored schemes.
Institutional Mechanism
District Level Bankers’ Committee (DLBC)
- Chaired by the Lead Bank.
- Includes representatives from banks, state government and RBI/NABARD.
State Level Bankers’ Committee (SLBC)
- Coordinates at the state level.
- Reviews credit flow and financial inclusion across districts.
Significance
- Strengthened district-level credit planning.
- Improved banking penetration in rural and semi-urban areas.
- Supported priority sector lending goals.
- Contributed to financial inclusion and poverty alleviation.
Recent Developments
- Greater emphasis on digital financial services.
- Integration with government schemes such as PMJDY, PMFBY and MUDRA.
- Monitoring through technology-driven dashboards and reporting systems.
Conclusion
The Lead Bank Scheme remains a cornerstone of India’s district-level banking architecture. By institutionalising coordination among banks and aligning credit with developmental priorities, it plays a crucial role in advancing inclusive growth and balanced regional development.
