Saturday, November 14, 2015

Lead Bank Scheme


The Lead Bank Scheme was introduced by RBI in December 1969. The Scheme aims at coordinating the activities of banks and other development agencies. For coordinating the activities in the district, a particular bank is assigned the lead bank’s responsibility of the district. The Scheme was last reviewed in 2009. Lead banks were advised to ensure that private sector banks are more closely involved in the implementation of the Lead Bank Scheme.

Fora under Lead Bank Scheme

Block Level Bankers’ Committee (BLBC)

BLBC coordinates between credit institutions and field level development agencies. It prepares and reviews the implementation of Block Credit Plan, and also resolves operational problems. LDM is the Chairman of BLBC. All the banks operating in the block, BDO, technical officers, industries and co-operatives are members of the Committee. BLBC meetings are held quarterly. The LDO of RBI and the DDM of NABARD attend the meetings. The representatives of Panchayat Samitis are also invited to attend the meetings at half yearly intervals.

District Consultative Committee (DCC)

Constitution of DCC

DCCs were constituted for coordinating various activities under the Lead Bank Scheme. The District Collector is the Chairman. RBI, NABARD, all the banks in the district,  various State Government departments and allied agencies are the members of the DCC. The Lead District Officer (LDO) represents the Reserve Bank as a member of the DCC. The LDM convenes the DCC meetings. The Director of MSME-Development Institutes is an invitee in districts where MSME clusters are located.

Conduct of DCC Meetings

i) DCC meetings should be convened at quarterly intervals.
ii)    Sub-committees may be set up to work on specific issues and submit reports to the DCC for its consideration.
iii)  DCC should give feedback to the SLBC on issues that needs to be discussed on a wider platform.

Agenda for DCC Meetings
A Monitoring mechanism to periodically assess and evaluate the progress
made to provide banking services. Prepare district wise Financial Inclusion Plan (FIP) for the three year period. The progress under FIP should be reviewed for quarterly submission to SLBC.
Specific issues inhibiting IT enabled financial inclusion and enabling it.
Facilitate 'enablers' and remove impeders of banking development.
Monitoring initiatives on Financial Literacy Centres (FLCs) and RSETI type Training Institutes for providing skills and capacity building to manage businesses.
Scaling up financial literacy efforts.
Review of performance under District Credit Plan (DCP)
Flow of credit to priority sector and weaker sections of the society
Assistance under Government sponsored schemes
Grant of educational loans
Progress under SHG - bank linkage
SME financing & bottlenecks thereof, if any
Timely submission of data by banks
Review of relief measures

The above list is not exhaustive. The lead banks may include any other agenda item considered necessary.

Role of LDMs

The office of LDM should be sufficiently strengthened. Officers of appropriate level and attitude should be posted as LDMs. Apart from the usual role, the new functions envisaged for LDMs include the following:

i)       Drawing up and monitoring the road map for banking penetration
ii)    Monitoring implementation of district credit plan
iii)  Associate with the setting up of Financial Literacy Centres (FLCs) and RSETIs by banks
iv)  Associate with organizing financial literacy camps by FLCs and rural branches of banks.
v)    Holding annual sensitisation workshops for banks and Government officials with participation by NGOs/Panchayati Raj Institutions (PRIs)
vi)  Arranging for quarterly awareness and feedback public meetings, grievance redressal, etc.

Quarterly Public Meeting and Grievance Redressal

The LDM should convene a quarterly public meeting in coordination with the LDO of Reserve Bank, banks and other stakeholders to generate awareness, obtain feedback from the public and provide grievance redressal or facilitate approaching the appropriate machinery for such redressal.

District Level Review Committee (DLRC) Meetings

DLRC meetings are chaired by the District Collector and attended by members of the DCC. Local MPs/MLAs/ Zilla Parishad Chiefs are also invited to these meetings. The DLRC meetings should be convened at least once in a quarter. Review of the programmes under Lead Bank Scheme is carried out in the meetings. Responses to queries need to be attended to promptly. The follow up of DLRC’s decisions is to be discussed in the DCC meetings.

DCC/DLRC meetings- Annual Calendar of Meetings

Lead banks have been advised to prepare an annual schedule of DCC and DLRC meetings for all districts in consultation with the Chairperson of the meetings, lead district officer of RBI and Public Representatives in case of DLRC and circulate to all members.

State Level Bankers’ Committee (SLBC)

Constitution of SLBC

i) SLBC is chaired by the CMD/ED of the Convenor bank. It comprises representatives of commercial banks, RRBs, State Cooperative Banks, RBI, NABARD, heads of Government departments and representatives of financial institutions operating in the State. Representatives of various organizations like retail traders, exporters and farmers’ union etc. are special invitees in SLBC meetings. SLBC meetings would be convened by the Convenor bank.

ii) Illustrative guidelines on the conduct of SLBC meetings have been issued.

Conduct of SLBC Meetings

i) The SLBC meetings are to be held at quarterly intervals. It is chaired by the CMD/ED of the Convenor bank and co-chaired by Additional Chief Secretary or Development Commissioner. High Level of participation ensure an effective and desired outcome.

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. Chief Ministers are encouraged to attend at least one SLBC meeting in a year.

iii)Steering Sub Committee/Sub-Committees for specific tasks like agriculture, micro, small/medium industries/enterprises, handloom finance, export promotion and financial inclusion etc may be constituted. Such committees are expected to meet more frequently than the SLBC.

iv) The secretariat of SLBC should be sufficiently strengthened.

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

vi) SLBCs may invite academicians and researchers as 'special invitees' to attend SLBC meetings occasionally both for adding value to the discussion and also associate them for product formulation. Other 'special invitees' may be invited to attend SLBC meetings depending on the agenda items/issues.

vii) Bank's linkage with NGOs/Corporate houses to ensure that the NGOs/corporates provide the necessary 'credit plus' services.

Agenda for SLBC Meetings

i.       Financial inclusion - monitoring mechanism to assess and evaluate the progress made to provide banking services. Compile and consolidate Financial inclusion Plan for the three year period. The progress under FIP should be reviewed quarterly and submitted to Reserve Bank.
ii.     The specific issues inhibiting  IT enabled financial inclusion and enabling it.
iii.  Issues to facilitate 'enablers' and remove 'impeders' of banking development.
iv     Monitoring initiatives for providing 'Credit Plus' activities by banks and setting up of Financial Literacy Centres (FLCs) and RSETI type training institutes for providing skills and capacity building to manage businesses
v.     Scaling up financial literacy efforts to achieve financial inclusion.
vi.Review of performance of banks under Annual Credit Plan (ACP)
vii.                        Regional imbalances in deployment of credit to various sectors of the economy
viii.                     Credit - Deposit Ratio of the State
ix.Flow of credit to priority sectors and weaker sections of the society
x. Assistance under Government sponsored schemes
xi. Grant of educational loans
xii.                        Progress under SHG - bank linkage
xiii. Discuss the problems faced by MSME sector
xiv.                     Steps taken for improving land record and recovery mechanism
xv.Timely submission of data by banks
xvi.                     Review of relief measures  
xvii.                   Issues remaining unresolved at the DCC/DLRC meetings

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

Banking Penetration

i)          SLBC Convenor banks / lead banks are advised to focus attention on achieving 100% financial inclusion. In addition to to the conventional brick and mortar branches, such banking services can be provided through any of the various forms of ICT-based models, including through BCs.

ii)        SLBC Convenor should take up with the State Governments issues of road/digital connectivity, conducive law and order situation, uninterrupted power supply and adequate security etc. for ensuring banking expansion.

SLBC - Yearly Calendar of Meetings

i) Convenor banks are advised to prepare a yearly calendar of programme in the beginning of the year itself. The calendar should clearly specify the cut off dates for data submission and acceptance thereof by SLBC Convenor. The agenda should also be circulated in advance. Following broad guidelines should be used for preparation of the calendar of programmes:
To be completed by
Preparation   of   calendar   of   SLBC/UTLBC meetings and intimation to all the concerned of the  cut-off  dates  for  submission  of  data and dates  of  meetings  as  per  the  dateline  given below.
5th  January every year
Reminder regarding the exact date of meeting and submission of data by banks to SLBC
15 days before end of the quarter
Dead  line  for  receipt  of  information/data  by SLBC Convenor bank
15 days before end of the quarter
Distribution of agenda cum background papers
20 days from the end of the quarter
Holding of the meeting
Within 45 days from the end of the quarter
Forwarding  the  minutes  of  the  meeting  to  all stakeholders
Within 10 days from holding the meeting
Follow-up of the action points emerged from the meeting
To be completed within 30 days of forwarding the minutes (for review in the next meeting)

ii)SLBC Convenor banks have 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 the senior functionary is not able to attend the meeting, the meeting should be held as planned in the calendar.

SLBC Website – Standardisation of information /data

Convenor banks are to maintain the SLBC websites where all instructions pertaining to Lead Bank Scheme and Government Sponsored Schemes are made available to the common man. In order to standardize the information and data on SLBC website, an indicative list of the information & data is given in the Annex II of the master circular. The list is only indicative and SLBCs are free to put any additional information.

Liaison with State Government

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

Capacity Building/Training/Sensitization Programmes

i) In each State, a full day sensitisation workshop may be convened by the SLBC Convenor in April/May every year. 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 Lead Bank Scheme.

ii) Staff of banks and government agencies are 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

Implementation of Lead Bank Scheme

Preparation of credit plans
Under LBS, planning starts with identifying block/activity wise potential estimated for various sectors.

Potential Linked Credit Plans (PLPs)
i)    PLPs take into account the long term physical potential, availability of infrastructure support, marketing facilities, and policies/programmes of Government etc.

ii) A pre-PLP meeting is convened by LDM during June every year to be attended by banks, Government agencies, etc. They reflect their views and concerns 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. DDM of NABARD will make 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 banks and DCCB/LDB will circulate the block/activity-wise potential to all their branches for preparing the Branch Credit Plans (BCP).

b)    A special BLBC meeting will be convened where the Branch Credit Plans will be discussed and aggregated to form the Block Credit Plan. DDM and LDM will ensure that the Plan is in tune with the identified potentials.

c)     All the Block Credit Plans will be aggregated by LDM to form a District Credit Plan. The Zonal/Controlling Offices of banks should take into account the commitments made in the DCP.

d)    The District Credit Plan will be placed before the DCC for final acceptance/approval. All the District Credit Plans would be aggregated into a State Level Credit Plan to be prepared by SLBC Convenor bank and launched by 1st of April every year.

Monitoring the performance of credit plans

At Block Level
Block Level Bankers’ Committee (BLBC)
At District Level
District Consultative Committee (DCC) & District Level Review Committee (DLRC)
At State Level
State Level Bankers’ Committee (SLBC)

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

i)     Annual Credit Plans are prepared with the sub sectors Agriculture & allied activities, Micro and Small Enterprises, Education, Housing and others under priority sector and Medium Industries, Large industries, Education, Housing and others in the non-priority sectors.

ii)     In order to maintain consistency and integrity of data, the ACP and FIP data needs to be grouped separately for scheduled commercial banks and other banks while presenting in the DCC/SLBC meetings and submitting to regional offices. The data of scheduled commercial banks needs to be further grouped into public sector banks, private sector banks and Regional Rural Banks.

Assignment of Lead Bank Responsibility

i)  Lead Bank Scheme is administered by the RBI since 1969. As on June 30, 2015, 25 public sector banks and one private sector bank have been assigned lead bank responsibility in 673 districts of the country.

ii)      As on June 30, 2015, the SLBC/UTLBC convenorship of 29 States and 7 Union Territories has been assigned to 16 public sector banks and one private sector bank.

iii) The Lead Bank Scheme (LBS) was extended to 16 districts of metropolitan areas of Chennai (1), Delhi (11), Hyderabad (1), Kolkata (1) and Mumbai (2) during 2013-14 bringing the entire country under the fold of the Lead Bank Scheme.

Roadmap for opening of banking outlets in unbanked villages

i)       In November 2009, under Phase-I, guidelines for providing banking services in villages with population more than 2000 was issued. Under Phase II, the roadmap for villages with less than 2,000 population has been rolled out in June 2012

ii)  SLBC convenor banks have been advised to monitor the progress of Phase II. Keeping in view the ongoing implementation of PMJDY, SLBC Convenors and lead banks have been advised to complete the process of providing banking services under Phase II by August 14, 2015.

Credit Deposit Ratio

CD ratio of banks in Rural and Semi-Urban Areas
Banks have been advised to achieve a credit deposit ratio of 60% in respect of their rural and semi-urban branches separately on an all-India basis. Banks should ensure that wide disparity in the ratios between different States / Regions is avoided.

Implementation of the recommendations of Expert Group on CD Ratio
i) As per the recommendations of the expert group, the CD ratio of banks should be monitored at different levels on the basis of the following parameters –
Institution / Level
Individual banks at Head Office
State Level (SLBC)
District Level

Cu = Credit as per place of Utilization
Cs = Credit as per place of Sanction
RIDF = Total Resource support provided to States under RIDF
Further, banks are advised that:

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

·     Districts having CD ratio between 40 and 60, will be monitored under the existing system by DCC, and

·     The district with CD ratio of less than 20 need to be treated on a special footing.

ii)  The LDM is designated as the Convenor of the SSC which will comprise of District co-ordinators of banks, LDO of RBI, DDM of NABARD, District Planning Officer or a representative of the Collector duly empowered to take decisions on behalf of the district administration.

The functions of the Special Sub-Committees are as under:

·     The SSCs will draw up Monitorable Action Plans (MAPs) for improving the CD ratio in their districts.

·     SSC will hold a special meeting immediately after its constitution and, set for itself a target for increasing the CD ratio initially for the current year. It will also set a definite time frame.

·     On the completion of this process, the target and time frame will be placed before the DCC for approval.

·     Take up the plans for implementation and monitor the same assiduously once in two months.

·     Report the progress to the DCC quarterly and through them to the Convenor of SLBC.

·     Consolidated report will be prepared and tabled at the SLBC meetings for discussion / information.

iii)   Areas, where the CD ratio less than 20, are generally located in hilly, desert, 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, the focus and level of efforts should be of a much higher scale.
For this,
·     All such districts should first be placed in a special category.
·     The responsibility for increasing 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 give a commitment for creation of rural infrastructure and support banks to lend and recover their dues.
·     Progress will be monitored at the district level and reported to the corporate offices of the concerned banks.
·     CMDs of banks would give special attention to the CD ratio in such districts.

Direct Benefit Transfer

Direct Benefit Transfer (DBT) was rolled out by Government of India in selected districts since January 2013. Banks have been advised to:

·     Complete account opening and Aadhaar seeding in all the DBT districts.
·     Monitor the progress in seeding of Aadhaar in bank accounts.
·     Provide acknowledgement to the beneficiary of seeding request and also send aconfirmation.
·     form DBT Implementation Co-ordination Committee, along with State Government department concerned, at district level and review the seeding of Aadhaar number in bank accounts.
·     ensure that district and village wise details of BCs engaged and other arrangements made by the bank is 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'.

Service Area Approach (SAA)

The Service Area Approach scheme was reviewed in December 2004 and it was decided to dispense with the restrictive provisions of the scheme while retaining the positive features such as credit planning and monitoring of the credit purveyance. 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 except under Government Sponsored schemes.

Dispensing with No Due Certificate
i) Banks have been advised to dispense with obtaining ‘No Due Certificate’ from the individual borrowers (including SHGs & JLGs) in rural and semi-urban areas unless the Government Sponsored Scheme itself provides for obtention of ‘No Dues Certificate’. It is clarified that this policy is also applicable to urban areas including metropolitan cities.

ii)       Banks are encouraged to use an alternative framework of due diligence which could, among others, consist of one or more of the following:

·     Credit history check through credit information companies
·     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 Credit Information Companies (CICs).

Monitoring of Financial Inclusion Plans (FIP) –State and District Level

i)       SLBC Convenor banks have been advised to compile /consolidate State wise bank group wise Financial Inclusion Plans for the 3 years and to review the progress in SLBC meetings.

ii)  FIP data needs to be grouped separately for scheduled commercial banks and other banks while presenting in the DCC/SLBC meetings and submitting to regional offices. The data of scheduled commercial banks needs to be further grouped into public sector banks, private sector banks and Regional Rural Banks.
Based on RBI Circular dt 1/07/15. Please visit for any further clarification if required…..          Poppy