RBI proposes revamp of Lead Bank Scheme; aims to boost district credit flow, inclusion

The Reserve Bank of India (RBI) on Friday proposed revised guidelines for the Lead Bank Scheme (LBS) to streamline operational processes and enhance the effectiveness of the programme introduced in 1969 to coordinate development activities at the district level, PTI reported.The Lead Bank Scheme is aimed at coordinating the activities of banks, governments and other developmental agencies through institutional fora under the framework to improve credit flow to priority sectors, support inclusive growth and deepen financial inclusion.The central bank has invited comments and feedback from stakeholders on the draft circular by March 6, 2026.The proposed changes seek to fine-tune the objectives of the scheme, including revising the structure, membership and agenda of various forums, clearly defining the roles and responsibilities of key functionaries, and strengthening the functioning of State Level Bankers’ Committees (SLBCs) and Lead District Manager offices.“The RBI shall designate a commercial bank as Lead Bank in each district, to coordinate the efforts of the credit institutions, Government, and other stakeholders to improve credit flow to the priority sectors and promote financial inclusion in the district,” the draft circular on Lead Bank Scheme said.SLBC convenor banks will coordinate banking activities across states and engage with state governments to resolve operational challenges in lending, while supporting banking expansion and financial inclusion efforts, it added.The draft also said convenor banks should raise issues such as road and digital connectivity, law and order, power supply and security with state governments and relevant departments to ensure adequate banking coverage and support financial inclusion goals.“Under LBS, a bottom-up approach is envisaged for credit planning. Block-wise /Activity-wise potential shall be estimated for various sectors, so as to prepare credit plans accordingly,” the draft said.The RBI said the Credit Deposit (CD) Ratio will continue to be monitored closely as a key indicator of credit deployment relative to deposits mobilised in a region.Banks are required to maintain a CD ratio of 60 per cent for rural and semi-urban branches combined at an all-India level.