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Lead Bank Scheme: how one bank leads each district
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The Lead Bank Scheme (LBS) is the RBI's arrangement under which every district in India is assigned to one bank, the lead bank, which takes the lead in coordinating the work of all banks there. It was introduced in December 1969, following the recommendations of the Gadgil Study Group and the Nariman Committee, on the idea of an "area approach" to banking: each district should be planned as a unit instead of every branch acting alone.
What a lead bank does
- Surveys the district to find credit gaps and opportunities.
- Prepares the district credit plan with other banks and government departments. NABARD's potential-linked credit plan feeds into it.
- Ensures branches and banking outlets reach unbanked villages, as part of financial inclusion.
- Convenes the District Consultative Committee (DCC) and reviews progress on lending and government sponsored schemes.
- Keeps contact with district administration. The bank appoints a Lead District Manager (LDM) who runs the lead bank office.
The committee structure
| Level | Body | Convened by |
|---|---|---|
| State | State Level Bankers' Committee (SLBC) | A convenor bank chosen for the state |
| District | District Consultative Committee (DCC) | The lead bank |
| Block | Block Level Bankers' Committee (BLBC) | The bank representative for the block, under the lead bank |
In Tamil Nadu, Indian Overseas Bank acts as the convenor of the SLBC (see slbctn.com). The committees bring bankers, the state government, NABARD and the RBI to one table each quarter to review targets such as priority sector lending and Kisan Credit Card coverage.
Which banks are lead banks
Mostly public sector banks and some private sector banks are given districts, and regional rural banks are not lead banks, though they work closely with the lead bank of their district.
Example
In a Tamil Nadu district, the LDM of the lead bank would present the district credit plan at the DCC meeting, noting that farm credit is under-delivered in two blocks. The DCC then asks banks to open outlets there.
How bank exams ask about it
Look for the year (1969), the committees (Gadgil Study Group and Nariman Committee), the idea behind it ("area approach"), who convenes the DCC (the lead bank) and the full form of SLBC. A common distractor asks which agency runs it; it is the RBI. Put it in the schemes and institutions list in banking awareness.
Frequently asked questions
Does every district have only one lead bank?
Yes, the scheme allots one lead bank per district, though a bank may lead several districts.
Is the lead bank the biggest bank in the district?
Not necessarily. It is the bank the RBI assigns.
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