What Happened
- The Reserve Bank of India issued a draft circular on revised guidelines for the Lead Bank Scheme (LBS) and invited public comments by March 6, 2026
- The revised guidelines aim to fine-tune the objectives, structure, membership, and agenda of various fora under the scheme
- Focus areas include clearer delineation of roles and responsibilities of key functionaries like the Lead District Manager (LDM)
- The revision seeks to strengthen the State Level Bankers' Committees (SLBCs) and LDM offices
- This is the first comprehensive revision of the LBS framework in several years, aimed at making district-level banking coordination more effective
Static Topic Bridges
Lead Bank Scheme — Origin and Framework
The Lead Bank Scheme was introduced by the RBI in December 1969, following the recommendations of two committees: the Gadgil Study Group (October 1969) and the Nariman Committee (November 1969). The Gadgil Study Group noted that commercial banks lacked adequate rural presence and recommended an "Area Approach" for banking development. The Nariman Committee endorsed this, recommending that specific banks be designated as "Lead Banks" in each district to coordinate banking and developmental activities. The scheme was operationalised in the wake of bank nationalisation (1969) and remains the foundational framework for district-level credit planning in India.
- Introduced: December 1969 by RBI
- Basis: Gadgil Study Group (October 1969) and F.K.F. Nariman Committee (November 1969)
- Core concept: "Area Approach" — one bank designated as Lead Bank per district to coordinate all banking activities
- Currently covers all districts in India; 26 public sector banks, SBI, and some private banks serve as Lead Banks
- Lead Banks prepare District Credit Plans (DCPs) and coordinate financial inclusion efforts
Connection to this news: The draft circular represents the latest effort to modernise this 57-year-old institutional framework, ensuring it remains relevant for contemporary financial inclusion goals and digital banking realities.
State Level Bankers' Committee (SLBC) and District Consultative Committee (DCC)
The SLBC is the apex inter-institutional forum at the state level under the Lead Bank Scheme. It coordinates the activities of all banks, government agencies, and developmental institutions operating within a state. At the district level, the District Consultative Committee (DCC) — chaired by the District Magistrate/Collector — performs a similar coordination function. These fora are critical for implementing government schemes (PM-Jan Dhan Yojana, MUDRA, PM-SVANidhi) at the grassroots level and reviewing credit flow to priority sectors.
- SLBC: Convened by the Lead Bank designated for the state; meets quarterly
- DCC: Chaired by the District Magistrate; includes Lead District Manager (LDM), NABARD, and all bank branches in the district
- Block Level Bankers' Committee (BLBC): Sub-district level forum for micro-level credit planning
- Key functions: Review credit deployment, monitor financial inclusion, coordinate government scheme implementation, address grievances
- SLBC sub-committees handle specific areas like MSME lending, SHG-bank linkage, and digital financial services
Connection to this news: The RBI's draft circular specifically targets strengthening the SLBC structure and clarifying the roles within DCC and BLBC fora, indicating that the existing coordination mechanisms have become less effective and need institutional refreshment.
Priority Sector Lending (PSL) and District Credit Plans
Priority Sector Lending (PSL) is an RBI mandate requiring banks to direct a specified percentage of their adjusted net bank credit (ANBC) to designated priority sectors. Currently, domestic commercial banks must lend 40% of ANBC to priority sectors, with sub-targets for agriculture (18%), micro enterprises (7.5%), and weaker sections (12%). The Lead Bank Scheme operationalises PSL at the district level through District Credit Plans, which identify credit gaps and set lending targets for each sector in the district.
- PSL target for domestic scheduled commercial banks: 40% of ANBC
- Sub-targets: Agriculture (18%), Micro enterprises (7.5%), Weaker sections (12%), Housing, Education
- District Credit Plans (DCPs) are prepared annually by the Lead Bank and discussed in DCCs
- The Annual Credit Plan aggregates all district plans at the state level for SLBC review
- PSL shortfall must be deposited with NABARD (RIDF) or SIDBI or NHB
Connection to this news: The Lead Bank Scheme's effectiveness directly impacts how well priority sector lending targets are met at the district level; clearer roles and stronger coordination fora should improve credit flow to underserved sectors and regions.
Key Facts & Data
- Lead Bank Scheme introduced: December 1969
- Recommending committees: Gadgil Study Group (October 1969) and Nariman Committee (November 1969)
- Draft circular comment deadline: March 6, 2026
- SLBC: Apex state-level banking coordination body
- DCC: District-level coordination body chaired by District Magistrate
- PSL target for commercial banks: 40% of ANBC
- Agriculture PSL sub-target: 18% of ANBC
- Bank nationalisation context: 14 banks nationalised on 19 July 1969