Laws and sections by number or title, due dates, pages, and updates.
The Reserve Bank of India issues a master circular on the Lead Bank Scheme to consolidate existing guidelines up to March 31, 2025. The scheme coordinates the activities of banks and development agencies through fora like Block Level Bankers Committees and State Level Bankers Committees. Commercial banks must achieve a credit deposit ratio of 60 percent in rural and semi-urban areas. Banks must also dispense with no due certificates for all loans in rural and semi-urban areas and follow standardized data flow mechanisms.
What you must do
Who is affected
Thresholds
Ask about this master circular
RBI/2025-26/04 FIDD.CO.LBS.BC.No.03/02.01.001/2025-26 April 01, 2025 The Chairman/Managing Director/Chief Executive Officer SLBC/UTLBC Convenor Banks/Lead Banks Madam/Dear Sir, Master Circular – Lead Bank Scheme The Reserve Bank of India has issued a number of guidelines/ instructions on Lead Bank Scheme from time to time. This Master Circular consolidates the relevant guidelines/ instructions issued by Reserve Bank of India on Lead Bank Scheme up to March 31, 2025 as listed in the Appendix I . 2. This Master Circular has been placed on the RBI website https://www.rbi.org.in Yours faithfully, (Nisha Nambiar) Chief General Manager-in-Charge Encl.: As above Structure 1 Introduction 2 Fora under Lead Bank Scheme 2.1 Block Level Bankers’ Committee 2.2 District Consultative Committee (DCC) 2.2.1 Constitution of DCC 2.2.2 Conduct of DCC Meetings 2.2.3 Agenda for DCC Meetings 2.2.4 Role of LDMs 2.2.5 Quarterly Public Meeting and Grievance Redressal 2.2.6 District Level Review Committee (DLRC) Meetings 2.2.7 DCC/DLRC meetings – Annual Calendar of Meetings 2.3 State Level Bankers’ Committee (SLBC) 2.3.1 Constitution of SLBC 2.3.2 Conduct of SLBC Meetings 2.3.3 Revised Agenda for SLBC Meetings 2.3.4 SLBC – Yearly Calendar of Meetings 2.3.5 SLBC Website – Standardization of information/data 2.3.6 Liaison with State Government 2.3.7 Capacity Building/Training/Sensitization Programmes 3 Implementation of Lead Bank Scheme 3.1 Preparation of credit plans 3.2 Potential Linked Credit Plans (PLPs) 3.3 Monitoring the performance of credit plans 3.4 Revised mechanism of Data Flow for LBS fora meetings 4 Assignment of Lead Bank Responsibility 5 Banking Penetration 5.1 Roadmap for provision of banking services in unbanked villages 5.2 Roadmap for opening brick and mortar branches in villages with population more than 5000 without a bank branch of a scheduled commercial bank 5.3 Aligning roadmap for unbanked villages having population more than 5000 with revised guidelines on Branch Authorisation Policy 5.4 National Strategy for Financial Inclusion (NSFI): 2019-2024 – Universal Access to Financial Services 6 Credit Deposit Ratio 6.1 CD Ratio of banks in Rural and Semi-Urban Areas 6.2 Implementation of the recommendations of Expert Group on CD Ratio 7 Direct Benefit Transfer 8 Service Area Approach (SAA) 8.1 Dispensing with ‘No Due Certificate’ 9 Enhancing Farmers’ Income 10 Expanding and Deepening of Digital Payments Ecosystem
(i) The genesis of the Lead Bank Scheme (LBS) can be traced to the Study Group headed by Prof. D. R. Gadgil (Gadgil Study Group) on the Organizational Framework for Implementation of the Social Objectives, which submitted its report in October 1969. The Study Group drew attention to the fact that commercial banks did not have adequate presence in rural areas and also lacked the required rural orientation. The Study Group, therefore, recommended the adoption of an 'Area Approach' to evolve plans and programmes for the development of an adequate banking and credit structure in the rural areas.
(ii) A Committee of Bankers on Branch Expansion Programme of Public Sector Banks (PSBs) appointed by the Reserve Bank of India under the Chairmanship of Shri F. K. F. Nariman (Nariman Committee) endorsed the idea of an ‘Area Approach’ in its report (November 1969), recommending that in order to enable the PSBs to discharge their social responsibilities, each bank should concentrate on certain districts where it should act as a 'Lead Bank'.
(iii) Pursuant to the above recommendations, the LBS was introduced by the Reserve Bank of India (RBI) in December 1969. The Scheme aims at coordinating the activities of banks and other developmental agencies through various fora to achieve the objective of enhancing the flow of bank finance to the priority sector and other sectors and to promote banks' role in the overall development of the rural sector. For coordinating the activities in a district, a particular bank is assigned ‘Lead Bank’ responsibility of the district. The Lead Bank is expected to assume a leadership role for coordinating the efforts of the credit institutions and the Government.
(iv) In view of the several changes that had taken place in the financial sector, the LBS was last reviewed by the High Level Committee headed by Smt. Usha Thorat, former Deputy Governor of the Reserve Bank of India in 2009.
(v) The Committee held wide ranging discussions with various stakeholders, viz., State Governments, banks, development institutions, academicians, NGOs, MFIs, etc. and noted that the scheme has been useful in achieving its original objectives of improvement in branch expansion, deposit mobilisation and lending to the priority sector, especially in rural/semi urban areas. There was overwhelming consensus that LBS needs to continue. Based on the recommendations of the Committee, guidelines were issued to State Level Bankers’ Committee (SLBC) Convenor banks and Lead Banks for implementation.
(vi) Envisaging greater role for private sector banks (PvSBs), Lead Banks were advised to ensure that PvSBs are more closely and actively involved in the implementation of the LBS, by leveraging on Information Technology and bringing in their expertise in strategic planning. They were also advised to involve themselves in preparation as well as implementation of the District Credit Plan (DCP).
(vii) Further, RBI constituted a “Committee of Executive Directors” of the Bank to study the efficacy of the scheme and suggest measures for its improvement. Based on the Committee’s recommendations and feedback received from various stakeholders, certain ‘action points’ were issued to SLBC Convenors/Lead Banks and NABARD on April 6, 2018.
Block Level Bankers’ Committee (BLBC) is a forum for achieving coordination between credit institutions and field level development agencies at the block level. The forum prepares and reviews the implementation of the Block Credit Plan and resolves operational issues in the implementation of the credit programmes of banks. The Lead District Manager (LDM) of the district is the Chairman of the BLBC. All the banks operating in the block including Small Finance Banks (SFBs), Wholly Owned Subsidiaries (WOS) of Foreign Banks, Regional Rural Banks (RRBs), District Central Co-operative Banks (DCCBs), Block Development Officer, technical officers in the block such as extension officers for agriculture, industries and co-operatives are members of the Committee. BLBC meetings are held at quarterly intervals. To strengthen the BLBC forum, which operates at the base level of the LBS, it is necessary that all branch managers attend BLBC meetings and enrich the discussions with their valuable inputs. Controlling Heads of banks may also attend a few of the BLBC meetings selectively. Participation by the District Development Manager (DDM) of NABARD in BLBCs would ensure better and more meaningful discussions for the development of the Block. Therefore, NABARD has been advised that DDMs should attend all BLBC meetings in their districts and actively participate in the credit planning exercise and review meetings at the block level. The Lead District Officer (LDO) of the RBI selectively attends the BLBC meetings. Representatives of Panchayat Samitis are also invited to attend the meetings at half yearly intervals to share their knowledge and experience on rural development in the credit planning exercise. Payments Banks (PBs) should also be invited to attend the meetings.
District Consultative Committees (DCCs) were constituted in the early seventies as a common forum at the district level for bankers as well as Government agencies/ departments to facilitate coordination in implementing various developmental activities under the LBS. The District Collector is the Chairman of the DCC meetings. RBI, NABARD, all commercial banks including SFBs, WOS of Foreign Banks, RRBs, PBs, State / District Central Co-operative Banks, various State Government departments and allied agencies are the members of the DCC. The LDO represents the RBI as a member of the DCC. The LDM convenes the DCC meetings. The Director of Micro, Small and Medium Enterprises Development Institute (MSME-DI) in the district is an invitee in districts where MSME clusters are located to discuss issues concerning MSMEs.
