RBI Revises Lead Bank Scheme To Boost Financial Inclusion And Priority Sector Lending

New Delhi, Jun 20 (KNN) The Reserve Bank of India (RBI) on Friday issued final guidelines for the Lead Bank Scheme (LBS) after incorporating public feedback.

The revised framework aims to strengthen district-level banking coordination, enhance accountability, and formalise credit planning at the block level, with the broader objective of improving credit flow to priority sectors and deepening financial inclusion.

The guidelines replace all earlier instructions governing the scheme, under which designated lead banks coordinate with other banks, government departments and development agencies at the district level.

Dedicated District Managers

Under the new norms, every lead bank must appoint a Lead District Manager (LDM) exclusively for each district under its charge. Banks have been advised to assign only one district per LDM, with responsibility for more than one district permitted only in exceptional cases. 

The RBI has also directed banks to strengthen LDM offices with dedicated staff, IT infrastructure, vehicles, and separate budgets.

Formalising Block-Level Credit Planning

The revised framework gives the Block Level Bankers' Committee (BLBC) a formal role as the base of the credit-planning process. The committee will prepare and review block credit plans, which will feed into district credit plans and, subsequently, state-level credit plans.

Stricter Timelines and Accountability

To improve accountability, the RBI has prescribed uniform timelines for meetings of Block Level Bankers' Committees, District Consultative Committees (DCCs), District Level Review Committees (DLRCs), and State Level Bankers' Committees (SLBCs). 

Lead District Managers and SLBC convenors have been directed to set up monitoring systems to ensure decisions taken at these meetings are implemented within set timelines.

Clearer Roles for DCC and DLRC

The central bank has drawn a sharper distinction between the two district-level committees. The DCC will serve as the coordination and implementation forum, while the DLRC will focus on reviewing credit flow and providing a platform for Members of Parliament, Members of Legislative Assemblies, and other public representatives to share feedback.

State-Level Focus and Virtual Participation

At the state level, SLBCs have been asked to concentrate on policy and strategic issues relating to priority sector lending and financial inclusion, while setting up dedicated sub-committees on agriculture, MSMEs, financial inclusion, and digital payments.

The revised framework also allows virtual participation in meetings where physical attendance is not feasible, and introduces stricter timelines for circulating agenda papers, recording minutes, and tracking follow-up action.

(KNN Bureau)