RBI/2024-25/02
FIDD.CO.LBS.BC.No.01/02.01.001/2024-25

April 01, 2024

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, 2024 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

Introduction

(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.

2. Fora under Lead Bank Scheme

2.1 Block Level Bankers’ Committee

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.

2.2 District Consultative Committee

2.2.1 Constitution of DCC

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.

2.2.2 Conduct of DCC Meetings

1. DCC meetings should be convened by the Lead Banks at quarterly intervals.

2. At the DCC level, sub-committees as appropriate, may be set up to work intensively on specific issues and submit reports to the DCC for its consideration.

3. DCC should give adequate feedback to the SLBC on various issues that need to be discussed on a wider platform, so that these receive adequate attention at the state level.

2.2.3 Agenda for DCC Meetings

While Lead Banks are expected to address the problems particular to the concerned districts, some of the important areas common to all districts, which the Lead Banks should invariably discuss in the fora are as under:

1. Review of progress under Financial Inclusion Plan (FIP)

2. Specific issues inhibiting and enabling IT enabled financial inclusion

3. Issues to facilitate 'enablers' and remove/minimise 'impeders' for banking development for inclusive growth

4. Monitoring initiatives for providing 'Credit Plus' activities by banks and State Governments, such as, setting up of Financial Literacy Centres (FLCs) and RSETI¹ type Training Institutes for providing skills and capacity building to manage businesses

5. Scaling up financial literacy efforts to achieve financial inclusion

6. Review of performance of banks under District Credit Plan (DCP)

7. Flow of credit to priority sector and weaker sections of the society

8. Enhancing Farmers’ Income

9. Assistance under Government sponsored schemes

10. Grant of educational loans

11. Progress under SHG - bank linkage

12. SME financing and bottlenecks thereof, if any

13. Timely submission of data by banks

14. Review of relief measures (in case of natural calamities wherever applicable)

The above list is illustrative and not exhaustive. Lead Banks may include any other agenda item considered necessary.

2.2.4 Role of Lead District Managers

As the effectiveness of the LBS depends on the dynamism of the District Collectors and the LDMs, with the support of the Regional/ Zonal Office, the office of LDM should be sufficiently strengthened with appropriate infrastructural support. Apart from the provision of a separate office space, technical infrastructure like computers, printer, data connectivity, etc. which are necessities for LDMs to discharge their core responsibilities may be provided to their office without exception. Officers of appropriate level, attitude and possessing requisite leadership skills should be posted as LDMs. Additionally, it is suggested that a dedicated vehicle may be provided to LDMs to facilitate closer liaison with bank officials, district administration officials as also to organise/ attend various financial literacy initiatives and meetings. The absence of a specialist officer/ assistant for data entry/ analysis is a common and major issue faced by LDMs. Liberty to hire the services of skilled computer operator/s may be given to the LDMs to overcome the shortage of staff in case appropriate staff is not posted at LDM’s office. Further, for successful functioning of the LBS, we expect Lead Banks to go the extra mile to provide facilities over and above the bare minimum to these critical field functionaries. Apart from the usual role of LDMs like convening meetings of the DCC and District Level Review Committee (DLRC) and periodical meetings of DDM/ LDO/ Government officials for resolving outstanding issues etc., the new functions envisaged for LDMs include the following:

1. Monitoring the implementation of the District Credit Plan

2. Associate with the setting up of Financial Literacy Centres (FLCs), RSETIs by banks

3. Associate with organizing financial literacy camps by FLCs and rural branches of banks

4. Holding annual sensitisation workshops for banks and Government officials with participation by NGOs/Panchayati Raj Institutions (PRIs)

5. Arranging for quarterly awareness and feedback public meetings, grievance redressal, etc.

2.2.5 Quarterly Public Meeting and Grievance Redressal

The LDM should convene a quarterly public meeting at various locations in the district, in coordination with the LDO of RBI, banks having presence in the area and other stakeholders to generate awareness on the various banking policies and regulations relating to the common person, obtain feedback from the public and provide grievance redressal to the extent possible at such meetings or facilitate approaching the appropriate machinery for such redressal.

2.2.6 District Level Review Committee Meetings

DLRC meetings are chaired by the District Collector and attended by members of the DCC. Public Representatives, i.e., Local MPs/MLAs/ Zilla Parishad Chiefs are also invited to these meetings. The DLRC meetings should be convened by the Lead Banks at least once in a quarter. The DLRC is a forum to review the pace and quality of implementation of various programmes under the LBS in the district. Hence, association of non-officials is considered useful. Public representatives (MPs/ MLAs / Zilla Panchayat Chiefs) shall invariably be invited to DLRC meetings. Therefore, Lead Banks should fix the date of DLRC meetings with due regard to the convenience of the representatives of the public, i.e., MPs/MLAs etc., to invite and involve them in all functions conducted by the banks in their districts, such as opening of new banking outlets, distribution of Kisan Credit Cards (KCCs), Self Help Group (SHG) credit linkage programmes, etc. Responses to queries from public representatives need to be accorded highest priority and attended to promptly. The forum may also have representatives of State Minority Commission, SC/ST Corporation and representatives of the group of beneficiaries of rural lending. The forum may also consider inviting people with expertise in fields, such as progressive farmers and local industrialists as special invitees. The follow up of the DLRC’s decisions is required to be discussed in the DCC meetings.

A compendium of instructions outlining the salient features of DLRC forum is given at Annex V.

2.2.7 DCC/ DLRC meetings- Annual Calendar of Meetings

i) DCC and DLRC are the important fora facilitating coordination among commercial banks, Government agencies and others at the district level to review and find solutions to the problems hindering developmental activities. Therefore, it is necessary that all the members participate and deliberate in these meetings. On a review of the DCC/ DLRC meetings, it was observed that late receipt/ non-receipt of intimation of the date of meetings, clash of dates with other events, commonality of dates, etc., hinder participation of members in these meetings, thus undermining the prime objective of conducting the meetings.

ii) Lead Banks have, therefore, been advised to prepare an Annual Schedule of DCC and DLRC meetings on calendar year basis for all districts, in consultation with the Chairperson of the meetings, LDO of the RBI and Public Representatives in case of DLRC. This yearly calendar should be prepared at the beginning of each year and circulated to all members as advance intimation for blocking future dates to attend the DCC and DLRC meetings and the meetings should be conducted as per the calendar. While preparing the calendar, it should be ensured that DCC and DLRC meetings are not held simultaneously. Lead Banks must fix dates of DLRC meetings, taking into account the convenience of the MPs and circulate the agenda papers to MPs well in advance.

2.3 State Level Bankers’ Committee

2.3.1 Constitution of SLBC

i) The State Level Bankers’ Committee was constituted in April 1977, as an apex inter-institutional forum to create adequate coordination machinery in all States, on a uniform basis for development of the State. SLBC is chaired by the Chairman/ Managing Director/ Executive Director of the Convenor Bank. It comprises representatives of commercial banks including SFBs, WOS of Foreign Banks, RRBs, PBs, State Cooperative Banks, RBI, NABARD, heads of Government departments including representatives from National Commission for Scheduled Castes/Tribes, National Horticulture Board, Khadi & Village Industries Commission, etc., and representatives of financial institutions operating in a State, who come together and sort out coordination problems at the policy implementation level. Representatives of various organizations from different sectors of the economy like industry bodies, retail traders, exporters, farmers’ unions, etc. are special invitees in the SLBC meetings for discussing their specific problems, if any. SLBC meetings are held on quarterly basis. The responsibility for convening the SLBC meetings would be of the SLBC Convenor Bank of the State.

ii) Recognising that SLBCs, primarily as a committee of bankers at the State level, play an important role in the development of the State, illustrative guidelines on the conduct of SLBC meetings have been issued.

2.3.2 Conduct of SLBC Meetings

i) SLBC meetings are required to be held regularly at quarterly intervals. The meetings are chaired by the Chairman/ Managing Director/ Executive Director of the Convenor Bank and co-chaired by the Additional Chief Secretary or Development Commissioner of the State concerned. In cases where the Managing Director/Chief Executive Officer/Executive Director of the SLBC Convenor Bank is unable to attend SLBC Meetings, the Regional Director/ GM(O-i-C) of the RBI shall co-chair the meetings along with the Additional Chief Secretary/Development Commissioner of the State concerned. A High Level of participation in SLBC/ UTLBC meetings ensures an effective and desired outcome with meaningful discussion on issues of public policy of both the Government of India and the Reserve Bank of India.

ii) The Chief Minister/Finance Minister and senior level officers of the State/RBI (of the rank of Deputy Governor / Executive Director) may be invited to attend the SLBC meetings. Further, the State Chief Ministers are encouraged to attend at least one SLBC meeting in a year.

iii) State Level Bankers’ Committee meetings should primarily focus on policy issues with participation of only the senior functionaries of the banks/ Government Departments. All routine issues may be delegated to sub-committee(s) of the SLBC. A Steering Sub-committee may be constituted in the SLBC to deliberate on agenda proposals from different stakeholders and finalise a compact agenda for the SLBC meetings. Typically, the sub-committee could consist of SLBC Convenor, RBI & NABARD representatives & senior State Government representative from the concerned department, e.g., Finance/ Institutional Finance and two to three banks having major presence. The sub-committee may be chaired by the Convenor (i.e., generally General Manager) of the SLBC Convenor Bank.

iv) Other issue-specific sub-committees may be constituted as required. The sub- committees may examine the specific issues relating to agriculture, micro, small/medium industries/enterprises, handloom finance, export promotion and financial inclusion, etc., in-depth and devise solutions/recommendations for adoption by the full committee. They are expected to meet more frequently than the SLBC. The composition of the sub-committees and subjects/ specific issues impeding/enabling financial inclusion to be deliberated upon, may vary from State to State depending on the specific problems/issues faced by the States.

v) The secretariat / offices of the SLBC should be sufficiently strengthened to enable the SLBC Convenor Bank to effectively discharge its functions.

vi) The various fora at lower levels may give adequate feedback to the SLBC on issues that need to be discussed on a wider platform.

vii) Several institutions and academicians are engaged in research, studies etc., that have implications for sustainable development in agriculture and MSME sector. Engaging with such research institutions and academicians would be useful in bringing in new ideas for furthering the objectives of the LBS. The SLBCs may, therefore, identify such academicians and researchers and invite them as 'special invitees' to attend SLBC meetings occasionally both for adding value to the discussions and also associate them with studies appropriate to the State. Other 'special invitees' may be invited to attend SLBC meetings depending on the agenda items/issues to be discussed in the meetings.

viii) The activities of NGOs in facilitating and channelling credit to the low income households are expected to increase in the coming years. Several corporate houses are also engaged in corporate social responsibility activities for sustainable development. A linkage with such NGOs/Corporate houses operating in the area to ensure that the NGOs/corporates provide the necessary 'credit plus' services can help leverage bank credit for inclusive growth. Success stories could be presented in SLBC meetings to serve as models that could be replicated.

2.3.3 Revised Agenda for SLBC Meetings

1. Review of financial inclusion initiatives, expansion of banking network and Financial Literacy:

1. Status of opening of banking outlets in unbanked villages, CBS-enabled banking outlets at the unbanked rural centres (URCs)

2. Review of operations of Business Correspondents (BCs) – hurdles/issues involved

3. Progress in increasing digital modes of payment in the State, provision of continuous connectivity with sufficient bandwidth, resolving connectivity issues/ connectivity options (Bharat Net, VSAT, etc.), installation of ATMs and PoS machines and status of implementation of e-receipts and e-payments in the State

4. Status of rollout of Direct Benefit Transfer (DBT) in the State, Aadhaar seeding and authentication

5. Review of inclusion of Financial Education in the School Curriculum, financial literacy initiatives by banks (particularly digital financial literacy)

6. Creating awareness about various schemes, subsidies, facilities, e.g., crop insurance, renewable energy

7. Review of efforts towards end-to-end projects involving all stakeholders in the supply chain.

2. Review of credit disbursement by banks:

1. Achievement under ACP of the State, Priority Sector Lending

2. Discussion on lending towards government sponsored schemes (DAY-NRLM, DAY-NULM, MUDRA, Stand-Up India, PMEGP, etc.) and impact of these schemes

3. Flow of credit to MSMEs and affordable housing

4. KCC loan, crop insurance under PMFBY

5. Grant of Educational Loans

6. Progress under SHG-bank linkage.

3. Enhancing Farmers’ Income

4. CD Ratio, Review of Districts with CD Ratio below 40% and working of Special sub-committees of the DCC (SSC).

5. Position of NPAs in respect of schematic lending, Certificate Cases and Recovery of NPAs.

6. Review of restructuring of loans in natural calamity affected districts in the State, if any.

7. Discussion on policy initiatives of the Central/State Government/RBI (Industrial Policy, MSME Policy, Agriculture Policy, Start-Up Policy, etc.), and expected involvement of banks.

8. Discussion on improving rural infrastructure/ credit absorption capacity:

1. Any large project conceived by the State Government to help improve CD Ratio

2. Explore the scope of state-specific potential growth areas and the way forward – choosing partner banks

3. Discussion on findings of region-focused studies, if any, and implementing the suggested solutions

4. Identification of gaps in rural and agriculture infrastructure, which need financing (rural godowns, solar power, agro processing, horticulture, allied activities, agri-marketing, etc.)

5. Implementation of Model Land Leasing Act 2016 (exploring possibility)

9. Efforts towards skill development on mission mode, partnering with Krishi Vigyan Kendra (KVK), Horticulture Mission, National Skill Development Corporation, Agriculture Skill Council of India (ASCI), etc., including a review of functioning of RSETIs.

10. Steps taken for improving land records, progress in digitization of land records and seamless loan disbursements.

11. Sharing of success stories and new initiatives at the district level that can be replicated in other districts or across the State.

12. Discussion on Market Intelligence Issues, e.g.:

1. Ponzi Schemes/ Illegal Activities of Unincorporated Bodies/ Firms/ Companies Soliciting Deposits from the Public

2. Banking Related Cyber Frauds, phishing, etc.

3. Instances of usurious activities by lending entities in the area, cases of over indebtedness

4. Credit related frauds by borrower groups, etc.

13. Issues remaining unresolved at DCC/DLRC meeting.

14. Timely submission of data by banks, adhering to the schedule of SLBC meeting.

15. Any other item, with the permission of the Chair.

The above list is illustrative and not exhaustive. SLBC Convenor Banks may include any other agenda item considered necessary.

2.3.4 SLBC - Yearly Calendar of Meetings

i) To improve the effectiveness and streamline the functioning of SLBC/UTLBC meetings, SLBC Convenor Banks have been advised to prepare a yearly calendar of programmes (calendar year basis) at the beginning of the year itself, for conducting the meetings. The calendar of programmes should clearly specify the cut off dates for data submission to SLBC and acceptance thereof by the SLBC Convenor. This yearly calendar should be circulated to all the concerned as an advance intimation for blocking of future dates of senior functionaries of various agencies like Central Government, State Governments, banks, RBI, etc. The SLBC/UTLBC meetings should be conducted as per the calendar under all circumstances. The agenda should also be circulated in advance without waiting for the data from defaulting banks. The matter should, however, be taken up with the defaulting banks in the SLBC meeting. In addition, the SLBC Convenor Bank should write a letter in this regard to the controlling office of the defaulting banks under advice to the Regional Office of RBI. The SLBC Convenor Bank will, however, continue to follow-up with banks for timely data submission. Further, in case the Chief Minister, Finance Minister or other senior functionaries are not able to attend the SLBC on some rare occasion, then if so desired by them, a special SLBC meeting can be held. Following broad guidelines should be used for preparation of the calendar of programmes:

ii) The objective of preparing the calendar of meetings in the beginning of the year is to ensure adequate notice of these meetings and timely compilation and dispatch of agenda papers to all stakeholders. It also ensures clear cut guidelines for the submission of data to SLBC Convenors by participating banks and Government Departments. It is expected to save precious time of SLBC Convenors that is otherwise spent in taking dates from various senior functionaries attending these SLBC meetings.

iii) SLBC Convenor Banks need to appreciate the advantages of ensuring adherence to the yearly calendars. SLBC Convenor Banks have therefore been advised to give wide publicity to the annual calendar at the beginning of the year and ensure that dates of senior functionaries expected to attend the meetings are blocked for all meetings by their offices. In case, despite blocking dates, if for some reason, the senior functionary is not able to attend the meeting, the meeting should be held as planned in the calendar. More importantly, the data for review in these meetings should be received as per deadlines set in the calendar and those who do not submit the data in time should be asked to explain the reasons for delay in sending the data that may be recorded in the minutes of the meeting. Under no circumstance, should the preparation of the agenda be delayed beyond the dates stipulated as per the calendar.

2.3.5 SLBC Website – Standardisation of information /data

SLBC Convenor Banks are required to maintain the SLBC websites where all instructions pertaining to LBS and Government Sponsored Schemes are made available and are accessible to the common man desiring any information relating to the conduct of meetings or State-wise data/ bank-wise performance. In order to standardize the information and data that is to be made available on the SLBC website, an indicative list is given in the Annex II. SLBCs should arrange to place the prescribed minimum information on the websites of SLBCs of their bank and keep it updated regularly, at least on quarterly basis. Banks may note that the list is only indicative and SLBCs are free to put any additional information considered relevant for the State.

2.3.6 Liaison with State Government

SLBC Convenor Banks are expected to co-ordinate the activities of all banks in the State, discuss with State Government officials, the operational problems in lending, extending necessary support for banking development and to achieve the objective of financial inclusion.

2.3.7 Capacity Building/ Training/ Sensitization Programmes

i) There is a need for sensitising the District Collectors and CEOs of Zilla Parishads on banks and banking in general as also on the specific scope and role of the LBS. In each State, a full day ‘Sensitisation Workshop’ may be convened by the SLBC Convenor Bank every year, preferably in April/ May. Such sensitisation should form part of the probationary training of such officers. Further, as soon as they are posted in a district, the SLBC may arrange for exposure visits for the District Collectors to the SLBC Convenor’s office for sensitisation and understanding of the LBS.

ii) Staff at the operational level of banks and government agencies associated with implementation of the LBS need to be aware of the latest developments and emerging opportunities. There is need for staff sensitisation/ training/seminars, etc., at periodic intervals on an ongoing basis.

3. Implementation of Lead Bank Scheme

3.1 Preparation of credit plans

Planning plays an important role in the implementation of the LBS and a bottom-up approach is adopted to map the existing potential for development. Under LBS, planning starts with identifying block-wise/ activity-wise potential estimated for various sectors.

3.2 Potential Linked Credit Plans

i) Potential Linked Credit Plans (PLPs) are a step towards decentralized credit planning with the basic objective of mapping the existing potential for development through bank credit. PLPs take into account the long-term physical potential, availability of infrastructure support, marketing facilities and policies/ programmes of Government etc. NABARD to take measures to ensure that PLPs should be more focussed and implementable so that banks can utilize them more gainfully while preparing the Branch Credit Plan (BCP). PLPs should emphasise on promotion of sustainable agricultural practices suitable to local conditions. While preparing the PLPs, the focus must be on identifying processes and projects that:

1. reduce carbon foot-print,

2. prevent overuse of fertilizers,

3. ensure efficient utilisation of water, and

4. address agricultural pollution issues.

The plans must also focus on promoting innovative farming systems, such as, organic farming, bio dynamic farming, permaculture and sustainable small-scale farming, as also promoting Farmer Producer Organisations (FPOs) and Farmers’ Markets. Such initiatives must be supported by appropriate investments and project finance frameworks.

ii) A pre-PLP meeting is convened by the LDM during June every year to be attended by banks, Government agencies, etc., to reflect their views and concerns regarding credit potential (sector/activity-wise) and deliberate on major financial and socio-economic developments in the district in the last one year and priorities to be set out for inclusion in the PLP. The DDM of NABARD makes a presentation in this meeting outlining the major requirements of information for preparing the PLP for the following year. The preparation of PLP for the next year is to be completed by August every year to enable the State Government to factor in the PLP projections.

iii) The procedure for preparing the District Credit Plan is as follows:

a) Controlling Offices of commercial banks including SFBs, WOS of Foreign Banks and Head Office of RRBs and DCCB/LDB circulate the accepted block-wise/activity-wise potential to all their branches for preparing the BCP by their respective branch managers. Banks should ensure that the exercise of preparation of branch/block plans is completed in time by all branches so that the Credit Plans become operational on time.

b) A special BLBC meeting is convened for each block where the BCPs are discussed and aggregated to form the Block Credit Plan. The DDM and the LDM guide the BLBC in finalizing the plan, ensuring that the Block Credit Plan is in tune with the potentials identified activity-wise, including in respect of Government Sponsored Schemes.

c) All the Block Credit Plans of the district are aggregated by the LDM to form the District Credit Plan (DCP). This plan indicates an analytical assessment of the credit needs of the district to be deployed by all the financial institutions operating in the district and the total quantum of funds to be earmarked as credit by all the financial institutions for a new financial year. The Zonal/Controlling Offices of banks, while finalizing their business plans for the year, should take into account the commitments made in the DCP which should be ready well in time before the performance budgets are finalized.

d) The DCP is then placed before the DCC by the Lead District Manager for final acceptance/approval. All the DCPs are eventually aggregated into a State Level Credit Plan to be prepared by the SLBC Convenor Bank and launched by the 1st of April every year.

e) The corporate business targets for branches, blocks, districts and states may be aligned with the Annual Credit Plans (ACP) to ensure better implementation. The Controlling Offices of the banks in each state should synchronize their internal business plans with the ACP.

3.3 Monitoring the Performance of Credit Plans

The performance of the credit plans is reviewed in the various fora created under the Lead Bank Scheme as shown below:

Monitoring of LBS by RBI - Monitoring Information System (MIS)

i) Data on ACP is an important element to review the flow of credit in the State. ACP formats are aligned with the extant reporting guidelines on priority sector lending. Accordingly, the ACP is to be prepared considering the categories of priority sector that would include Agriculture, Micro, Small and Medium Enterprises, Export Credit, Education, Housing, Social Infrastructure, Renewable Energy and Others. The definition of MSMEs will be as per Government of India (GoI), Gazette Notification S.O. 2119 (E) dated June 26, 2020 read with circular RBI/2020-2021/10 FIDD.MSME andNFS.BC.No.3/06.02.31/2020-21 read with FIDD.MSME and NFS. BC. No.4/06.02.31/2020-21 dated July 2, 2020, August 21, 2020 respectively on ‘Credit flow to Micro, Small and Medium Enterprises Sector’ and updated from time to time. With a view to simplify the MIS Statements, it had been decided that the quarterly statement on progress under ACP may be prepared in an all-inclusive single format - MIS (Annex IV) containing data on (a) ACP targets (b) ACP achievements/ disbursements and (c) ACP sector/ sub-sector wise loan amount outstanding, for all categories of LBS fora member banks viz. PSBs, PvSBs, RRBs, SFBs and Rural Cooperative Banks (StCBs and DCCBs). The bank group wise statements as per the prescribed format should be prepared and the same to be placed for meaningful review in all DCC and SLBC meetings.

ii) In order to maintain consistency and integrity of data with the All-India data of SCBs and facilitate a meaningful review/analysis of data, the ACP data needs to be grouped separately for SCBs and other banks like State Cooperative Banks (StCBs), DCCBs, etc. while presenting in the DCC/SLBC meetings and submitting to our Regional Offices. The data pertaining to SCBs needs to be further grouped into public sector banks, private sector banks, RRBs, and WOS of Foreign Banks to know the bank group wise position.

3.4 Revised mechanism of Data Flow for LBS fora meetings

At present, discussions at the quarterly meetings of the various LBS fora viz. State Level Bankers’ Committee (SLBC), District level Consultative Committee (DCC) and Block Level Bankers’ Committee (BLBC) primarily focus on the performance of banks in the disbursement of loans vis-a-vis the allocated target under the Annual Credit Plan. The integrity & timeliness of the data submitted by banks for the purpose has been an issue as a significant portion of this data is manually compiled and entered into the Data Management Systems of the SLBC Convenor Banks. The extent to which this data corresponds with the data present in the Core Banking Solution (CBS) of the respective banks also varies significantly. Therefore, there is need of a standardized system to be developed on the website maintained by each SLBC to enable uploading and downloading of the data pertaining to the Block, District as well as the State. The relevant data must also be directly downloadable from the CBS and/ or MIS of the banks with a view to keeping manual intervention to a minimal level in the process. The procedure relating to the envisaged intervention in this area is given below:

Management of Data Flow at LBS Fora – Procedure

i. Each bank’s CBS should have a provision to generate a report pertaining to all LBS related data/ tables to Excel. This data should have information pertaining to all the branches operating in the state including fields/ columns for District and Block name. Access to Download & Export this data from the bank’s CBS should be given to the Controlling Offices of the banks who would be solely responsible for the process of ‘Data Feeding’ for all districts/ blocks within their jurisdiction.

ii. The ‘Data Feeding’ process is the process of uploading this Excel file (downloaded in step (i) above) on the SLBC websites. SLBC websites should have a provision to ‘Import/ Upload’ all the data present in the Excel Sheet on the database of the SLBC website. This would obviate any manual ‘data entry’ at the SLBC/ Controlling Office level.

iii. To facilitate the above functionality, each SLBC Convenor Bank would have to add this ‘Import/ Upload’ functionality to their SLBC website along with the requisite capabilities at the back-end.

iv. The SLBC website would, thus, effectively work as a data aggregation platform. Further, data analysis capabilities could also be added to the SLBC websites depending on the available resources.

v. The SLBC websites should provide access to LDMs to download district and block specific data directly from this website thus ensuring integrity and timely availability of data.

vi. There could still be some data pertaining to State Government Schemes/ other data that is not available on the CBS or MIS of the banks. This would have to be collated at the Controlling Office level as is done now. At the SLBC website, functionalities could be provided to enter this data too. This could then be downloaded by the LDMs for district/ block level reports. Banks may also add Open Format fields like ‘text boxes’ for data or information that is special or is entered/ used once in a while.

vii. Such a system ensures that LDMs & SLBC Convenor Banks have to do zero or minimal data entry/ feeding and all data is entered by a single ‘custodian of data’ which is the Controlling Office of each bank. Any information to be provided by Government extension agencies could also be similarly uploaded.

Necessary modifications may be made on the SLBC websites and to the CBS & MIS systems of all banks to implement the envisaged data flow mechanism.

A Working Group of select SLBC Convenor banks and NABARD was constituted by RBI to work out a standardised system for collection, storage, presentation and management of data on the SLBC/ UTLBC website. A Standard Operating Procedure (SOP), which may be followed by SLBC/ UTLBC Convenor Banks, member banks and LDMs, as suggested by the Working Group for management of the data flow is given at Annex III.

4. Assignment of Lead Bank Responsibility

i) Lead Bank Scheme is administered by the Reserve Bank of India since 1969. The assignment of Lead Bank responsibility to designated banks in every district is done by the Reserve Bank of India following a detailed procedure formulated for this purpose. As on March 31, 2024, 12 public sector banks and two private sector banks (Jammu & Kashmir Bank and ICICI Bank) have been assigned Lead Bank responsibility in 779 districts of the country.

ii) State Level Bankers’ Committee (SLBC)/Union Territory Level Bankers' Committee (UTLBC), as an apex level forum at the State/Union Territory (UT) level, coordinates the activities of the financial institutions and Government departments in the State/Union Territory under the Lead Bank Scheme. SLBC/UTLBC Convenorship is assigned to banks for this purpose. As on March 31, 2024, the SLBC/ UTLBC convenorship of 28 States and 8 Union Territories has been assigned to 11 public sector banks and one private sector bank. A list of State/UT wise SLBC/UTLBC Convenor Banks and district wise Lead Banks is given in Annex I.

iii) The Lead Bank Scheme (LBS) has been extended to the districts in the metropolitan areas, thus bringing the entire country under the fold of the Lead Bank Scheme.

5. Banking Penetration

i) Over the years, the focus of the Lead Bank Scheme has shifted to inclusive growth and financial inclusion. The use of Information Technology (IT) and intermediaries has enabled banks to increase the outreach, scale and depth of banking services at affordable cost.

ii) SLBC Convenor Banks/ Lead Banks are advised to focus attention on the need for achieving 100% financial inclusion through penetration of banking services in the rural areas. Revised guidelines on ‘Rationalisation of Branch Authorisation Policy’ issued by the Department of Regulation (DoR), RBI on May 18, 2017 advised banks to consider opening of a CBS-enabled banking outlet or a part time banking outlet, as the case may be, in unbanked rural centres.

iii) SLBC Convenor Banks should take up with the State Governments/ other Government departments concerned, impeders, such as, issues of road/digital connectivity, conducive law and order situation, uninterrupted power supply, adequate security, etc., for ensuring banking expansion at all centres where penetration by the formal banking system is required. However, these impeders should not inhibit the scaling up of financial inclusion initiatives.

5.1 Roadmap for providing banking services in unbanked villages

In November 2009, a roadmap to provide banking services in villages with population more than 2000 was rolled out. All the identified villages have been provided with banking services through branches, BCs or through other modes, such as, ATMs and mobile vans. Later, in June 2012, a roadmap to provide banking services in unbanked villages with less than 2000 population was rolled out. SLBC Convenor Banks and Lead Banks were advised to complete the process of providing banking services in unbanked villages with population below 2000 by August 14, 2015.

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

As brick and mortar branches are an integral component of financial inclusion, it was decided to focus on villages with population above 5000 without a bank branch of a SCB. This was to enable banks to provide quality financial services and timely support to BC outlets that would help in sustaining and strengthening the services provided through BCs and for ensuring close supervision of BC operations. Accordingly, SLBC Convenor Banks were advised to identify villages with population above 5000 without a branch of a SCB in their State and allot these villages among SCBs (including RRBs) for opening of branches.

5.3 Aligning roadmap for unbanked villages having population more than 5000 with revised Guidelines on Branch Authorisation Policy

In terms of the DoR circular dated May 18, 2017 on ‘Rationalisation of Branch Authorisation Policy - Revision of Guidelines’, final guidelines on ‘Banking Outlets’ have been issued to facilitate financial inclusion as also to provide flexibility to banks on the choice of delivery channel. Accordingly, SLBC Convenor Banks have been advised to identify all unbanked rural centres (URCs) in the State, compile and maintain an updated list of all such centres. The updated list should be displayed on the website of each SLBC to facilitate banks to choose/indicate the place/centre where they wish to open a ‘banking outlet’.

ii) Further, SLBC Convenor Banks have been advised that in order to comply with the criteria of opening at least 25 percent of total banking outlets in unbanked rural centres in Tier 5 and 6 centres, as prescribed vide DoR circular dated May 18, 2017, banks should give priority to villages without a banking outlet having population more than 5000 (i.e., Tier 5 centres) and ensure that all such villages under their jurisdiction are covered with a CBS-enabled Banking Outlet on priority basis.

iii) The updated list of URCs should be tabled in all SLBC meetings during discussions on the progress of providing banking services in unbanked rural centres.

5.4 National Strategy for Financial Inclusion (NSFI): 2019-2024 – Universal Access to Financial Services

Providing banking access to every village within a 5 KM radius/ hamlet of 500 households in hilly areas has been one of the key objectives of the National Strategy for Financial Inclusion (NSFI): 2019-2024. Accordingly, SLBC/ UTLBC Convenor Banks have been advised to review the presence of banking outlets of SCBs, RRBs, Small Finance Banks (SFBs) and PBs in every village within a 5 KM radius/ hamlet of 500 households in hilly areas under their jurisdiction(s) and ensure that universal access to financial services is provided to all such villages.

6. Credit Deposit Ratio (CD Ratio)

6.1 CD Ratio of Banks in Rural and Semi-Urban Areas

Banks have been advised to achieve a CD Ratio of 60 percent in respect of their rural and semi-urban branches separately on an All-India basis. While it is not necessary that this ratio should be achieved separately, branch-wise, district-wise or region-wise, banks should, nevertheless, ensure that wide disparity in the ratios between different States/ Regions is avoided to minimise regional imbalance in credit deployment. The credit dispensation in certain districts is very low, due to various factors, such as, lack of necessary infrastructure, varying ability of different regions to absorb credit, etc. Banks may review the performance of their branches in such areas and take necessary steps to augment credit flow. The Lead Banks may discuss the problem in all its aspects with other financial institutions in the district and also in the DCC forum.

6.2 Implementation of the Recommendations of the Expert Group on CD Ratio

i) An Expert Group was constituted by the Government of India to go into the nature and magnitude of the problem of low CD Ratio across States/ Regions and to suggest steps to overcome the problem. The Expert Group examined the problems and causes of low CD Ratio and made recommendations. As per the recommendations, the CD Ratio of banks should be monitored at different levels based on the following parameters:

Where:

Cu = Credit as per place of Utilization
Cs# = Credit as per place of Sanction
RIDF = Total Resource support provided to States under RIDF

# In case of credit proposals received at district level but not sanctionable thereat due to limitations of the sanctioning power and sanctioned at bank’s Head office/ controlling offices and the loan utilised / disbursed in districts through branches, are treated as loan sanctioned and utilised at district level. Hence, it may be considered at district level for computing CD ratio.

As regards calculation of CD ratio based on limit sanctioned/ amount outstanding, it is clarified that the CD ratio may be calculated on the basis of amount outstanding.

Further, banks are advised that:

In districts having CD Ratio less than 40 percent, Special Sub-Committees (SSCs) of the DCC shall be set up to monitor the CD Ratio.

• Districts having CD Ratio between 40 and 60 percent shall be monitored under the existing system by the DCC, and

• The districts with CD Ratio less than 20 percent need to be treated on a special footing.

ii) SSCs of the DCC should be set up in the districts having CD Ratio less than 40 percent, to monitor the CD Ratio and to draw up Monitorable Action Plans (MAPs) to increase the CD Ratio. The LDM is designated as the Convenor of the SSC which, in addition to the District Co-ordinators of banks functioning in the area, should comprise of the LDO of RBI, the DDM of NABARD, the District Planning Officer or a representative of the Collector duly empowered to take decisions on behalf of the district administration.

The functions of the SSC are as under:

• The SSCs should draw up MAPs for improving the CD Ratio in their districts on a self-set graduated basis.

• For this purpose, the SSC should hold a special meeting immediately after its constitution and based on various ground level parameters, set for itself, a target for increasing the CD Ratio, initially for the current year. It will also, at the same meeting, set a definite time frame to achieve CD Ratio more than 60 percent in annual increments.

• Consequent to the completion of this process, the target and time frame self-set by the SSC should be placed before the DCC for approval.

• The plans for implementation must then be taken up by the SSC and monitored assiduously, once in two months.

• The SSC should report the progress on the implementation of the plan to the DCC on a quarterly basis and through them to the SLBC Convenor.

• Based on the feedback received from the DCC regarding the progress in implementation of the MAPs, a consolidated report should be prepared by the SSC and tabled at all SLBC meetings for discussion/ information.

iii) As regards the districts with CD Ratio less than 20 percent, these are generally located in hilly, desert or inaccessible terrains and/ or those dependent solely on the primary sector and/ or characterized by a breakdown of the law and order machinery. In such areas, conventional methods are not likely to work unless the banking system and the State Government come together in a specially meaningful way.

iv) While the framework for implementation for raising the CD Ratio in these districts will be the same as in the case of districts with CD Ratio below 40 percent (i.e., setting up of SSC etc.), the focus of attention and the level of efforts should be of a much higher scale.

For this,

• All such districts should first be placed in a special category.

• Thereafter, the responsibility for increasing their CD Ratio should be taken by banks and State Governments and the districts should be "adopted" by the District Administration and the Lead Bank jointly.

• While banks would be responsible for credit disbursement, the State Government would be required to give an upfront commitment regarding its responsibilities for creation of identified rural infrastructure together with support in creating an enabling environment for banks to lend and to recover their dues.

• Progress in the special category districts should be monitored at the district level and reported to the corporate offices of the concerned banks.

• The Chairmen/ Managing Directors of banks should give special attention to the CD Ratio in such districts.

7. Direct Benefit Transfer

DBT was rolled out by the Government of India in selected districts in January 2013. It was expanded to other districts subsequently. SLBC Convenor Banks were advised to co-ordinate with the Government authorities to implement DBT. Banks were advised to include the status of the roll-out of DBT as a regular agenda item for discussion in SLBC meetings as part of Financial Inclusion/ DBT implementation. As a prerequisite to the implementation of DBT, every eligible individual should have a bank account. Further, to make disbursements at the doorstep through the ICT-based BC model, banking outlets either through brick & mortar branches or the branchless mode is needed in all villages across the country. Hence, banks have been advised to:

• take steps to complete the opening of bank accounts and seeding of Aadhaar numbers in all bank accounts.

• closely monitor the progress in seeding of Aadhaar number with the bank accounts of beneficiaries.

• put in place a system to provide the beneficiary of the seeding request an acknowledgement and send a confirmation of the seeding of Aadhaar number.

• form a DBT Implementation Co-ordination Committee, along with the State Government department concerned at district level and review the seeding of Aadhaar numbers in bank accounts.

• ensure that district and village wise names and other details of BCs engaged/ other arrangements made by the bank are displayed on the SLBC website.

• set up a Complaint Grievance Redressal mechanism in each bank and nominate a Complaint Redressal Officer in each district, to redress the grievances related to ‘seeding of Aadhaar number in bank accounts'.

Banks were further advised to ensure that opening of bank accounts and seeding of Aadhaar numbers with existing or new accounts of eligible beneficiaries opened for the purpose of DBT under social welfare schemes, was in conformity with the provisions listed under Section 16 of the Master Direction - Know Your Customer (KYC) Direction, 2016 (updated as on May 10, 2021) and extant provisions of the Prevention of Money Laundering (PML) Rules.

8. Service Area Approach (SAA)

i) The Service Area Approach (SAA) introduced in April 1989 for planned and orderly development of rural and semi-urban areas was applicable to all SCBs including RRBs. Under SAA, each bank branch in a rural or semi-urban area was designated to serve an area of 15 to 25 villages and the branch was responsible for meeting the needs of bank credit of its service area. The primary objective of SAA was to increase productive lending and forge effective linkages between bank credit, production, productivity and increase in income levels.

ii) The SAA scheme was reviewed in December 2004 and it was decided to dispense with the restrictive provisions of the scheme, while retaining the positive features of the SAA, such as, credit planning and monitoring of the credit purveyance. Accordingly, under SAA, the allocation of villages among the rural and semi-urban branches of banks were made not applicable for lending except under Government Sponsored Schemes. Thus, while the commercial banks and RRBs are free to lend in any rural and semi-urban area, the borrowers have the choice of approaching any branch for their credit requirements.

8.1 Dispensing with ‘No Due Certificate’

In order to ensure hassle free credit to all borrowers, especially in rural and semi-urban areas and keeping in view the technological developments and the different ways available with banks to avoid multiple financing, banks have been advised to dispense with obtaining a ‘No Due Certificate’ from individual borrowers (including SHGs and JLGs) in rural and semi-urban areas for all types of loans, including loans under Government Sponsored Schemes, irrespective of the amount involved unless the Government Sponsored Scheme itself provides for obtention of a ‘No Due Certificate’. Further, it has been clarified that the policy of dispensing with a ‘No Due Certificate’ for lending by banks is also applicable to urban areas including metropolitan cities.

ii) Banks are encouraged to use an alternative framework of due diligence as part of the credit appraisal exercise other than the ‘No Due Certificate’ which could, among others, consist of one or more of the following:

• Credit history check through Credit Information Companies (CICs)

• Self-declaration or an affidavit from the borrower

• CERSAI registration

• Peer monitoring

• Information sharing among lenders

• Information search (writing to other lenders with an auto deadline)

iii) Banks are also advised to submit information/data to all CICs, as required in terms of extant instructions issued by RBI.

9. Enhancing Farmers’ Income

i) The Government of India, in the Union Budget 2016-17, had announced its resolve to double the income of farmers by 2022. Several steps were taken towards attaining this objective, including setting up of an inter-ministerial committee for preparation of a blue print for the same. This agenda was reiterated by the government in several fora and acquired primacy from the point of view of rural and agricultural development.

ii) The strategy to achieve this goal, inter-alia, includes,

• Focus on irrigation with large budgets, with the aim of "per drop, more crop".

• Provision of quality seeds and nutrients based on soil health of each field.

• Investments in warehousing and cold chains to prevent post-harvest crop losses.

• Promotion of value addition through food processing.

• Creation of a national farm market, removing distortions and development of infrastructure such as e-platform across 585 stations.

• Strengthening of the crop insurance scheme to mitigate risks at affordable cost.

• Promotion of ancillary activities like poultry, bee-keeping and fisheries.

• Diversification towards high value crops needs to be promoted at district level, accordingly value chain needs to be developed for those high value crops.

• Creation of a Start-up Ecosystem in agriculture and allied sector.

• Promotion of organic farming in the country.

iii. Needless to emphasize that acceleration in income generation is significantly dependent on better capital formation in agriculture. Towards this, banks should revisit their documentation for crop loans, simplify them where required and ensure speedy sanctioning and disbursal of loans within specified time limits.

iv. The Lead Bank Scheme, which ensures inter-departmental/ governmental coordination in the financial sector, should, therefore, be leveraged to further the objective of enhancing farmers’ Income. Lead Banks are accordingly advised to ensure the following:

1. Work closely with NABARD in the preparation of Potential Linked Credit Plans (PLPs) & Annual Credit Plans (ACPs) keeping the above strategy in consideration

2. Include ‘Enhancing Farmers’ Income as a regular agenda under the LBS in various fora such as SLBC, DCC, DLRC and BLBC

3. For monitoring and reviewing the progress, Lead Banks may use benchmarks as may be provided by NABARD

4. Map the overall strategy as given in para 9 (ii) above to the agriculture/ agro-ancillary lending plan of the bank.

10. Expanding and Deepening of Digital Payments Ecosystem

With a view to expanding and deepening the digital payments ecosystem, the SLBCs/ UTLBCs were advised to identify one district in their respective States/ UTs on a pilot basis, in consultation with banks and stakeholders and allocate it to a bank with significant footprint, which would endeavour to make the district 100% digitally enabled. With this, every individual in the district would be able to make/ receive payments digitally in a safe, secure, quick, affordable and convenient manner. SLBC/ UTLBC Convenor Banks were also advised to devise a time bound roadmap for all branches of member banks (Public Sector Banks, Private Sector Banks, RRBs, SFBs and PBs) located in the identified district(s) for on-boarding merchants/ traders/ businesses/ utility service providers to facilitate fully digital transactions. Further, SLBC/ UTLBC Convenor Banks were advised to constitute a Sub-Committee on Digital Payments at the SLBC/ UTLBC level. Subsequently, SLBCs/ UTLBCs have been advised to devise a timebound roadmap to cover all the districts in their respective States/UTs and make them 100% digitally enabled.

Appendix I

List of Circulars/ /Guidelines/ Instructions

Appendix II

Other References of Directions / Circulars Relevant to Lead Bank Scheme

¹ Rural Self Employment Training Institutes (RSETIs) should be more actively involved and monitored at various fora of LBS, particularly at the DCC level. Focus should be on development of skills to enhance credit absorption capacity in the area and renewing the training programmes towards sustainable micro enterprises. RSETIs should design specific programmes for each district/ block, keeping in view the skill mapping and the potential of the region for necessary skill training and skill up gradation of the rural youth in the district.