LEAD BANK SCHEME

Introduction

(i) The genesis of 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 appointed by Reserve Bank of India under the Chairmanship of Shri F. K. F. Nariman (Nariman Committee) endorsed the idea of area approach in its report (November 1969) recommending that in order to enable the public sector banks 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 Lead Bank Scheme was introduced by Reserve Bank of India in December 1969. The Scheme aims at coordinating the activities of banks and other developmental agencies through various fora in order to achieve the objective of enhancing the flow of bank finance to priority sector and other sectors and to promote banks' role in overall development of the rural sector. For coordinating the activities in the district, a particular bank is assigned the lead bank responsibility of the district. The lead bank is expected to assume leadership role for coordinating the efforts of the credit institutions and Government

(iv) In view of the several changes that had taken place in the financial sector, the Lead Bank Scheme was last reviewed by the High Level Committee headed by Smt Usha Thorat, Deputy Governor of the Reserve Bank of India in 2009.

(v) The High Level 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 sectors, especially in rural/semi urban areas. There was overwhelming consensus that the Scheme needs to continue. Based on the recommendations of the Committee, guidelines were issued to SLBC Convenor banks and lead banks for implementation.

(vi) Envisaging greater role for private sector banks, the lead banks were advised to ensure that private sector banks are more closely involved in the implementation of the Lead Bank Scheme. The private sector banks should involve themselves more actively by leveraging on Information Technology bringing in their expertise in strategic planning. They should also involve themselves in the preparation as well as implementation of the District Credit Plan.

2. Fora under Lead Bank Scheme

2.1 Block Level Bankers’ Committee (BLBC)

BLBC is a forum for achieving coordination between credit institutions and field level development agencies at the block level. The forum prepares and reviews implementation of Block Credit Plan and also resolves operational problems in implementation of the credit programmes of banks. Lead District Manager of the district is the Chairman of the Block Level Bankers’ Committee. All the banks operating in the block including the district central co-operative banks, RRBs, 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. The Lead District Officer (LDO) of RBI and the District Development Manager (DDM) of NABARD selectively attend the meetings of the BLBCs. The representatives of Panchayat Samitis are also invited to attend the meetings at half yearly intervals so as to share their knowledge and experience on rural development in the credit planning exercise.

2.2 District Consultative Committee (DCC)

2.2.1 Constitution of DCC

DCCs were constituted in the early seventies as a common forum at district level for bankers as well as Government agencies/departments to facilitate coordination in implementing various developmental activities under the Lead Bank Scheme. The District Collector is the Chairman of the DCC meetings. Reserve Bank of India, NABARD, all the commercial banks in the district, co-operative banks including District Central Cooperative Bank (DCCB), RRBs, 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 Lead District Manager convenes the DCC meetings. The Director of Micro Small and Medium Enterprises Development Institutes (MSME-DI) is an invitee in districts where MSME clusters are located to discuss issues concerning MSMEs.

2.2.2 Conduct of DCC Meetings

1. DCC meeting 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 needs 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 which are 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. The 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 RSETI 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. Doubling of Farmers’ Income by 2022
   
9. Assistance under Government sponsored schemes
   
10. Grant of educational loans
    
11. Progress under SHG - bank linkage
    
12. SME financing & 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. The lead banks may include any other agenda item considered necessary.

2.2.4 Role of LDMs

As the effectiveness of the Lead Bank Scheme depends on the dynamism of the District Collectors and the Lead District Managers (LDMs), with supportive role of the Regional/Zonal Office, the office of LDM should be sufficiently strengthened with appropriate infrastructural support being the focal point for successful implementation of the Lead Bank Scheme. Officers of appropriate level and attitude should be posted as LDMs. Apart from the usual role of LDMs like convening meetings of the DCC/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 implementation of 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 Lead District Manager should convene a quarterly public meeting at various locations in the district in coordination with the LDO of Reserve Bank, banks having presence in the area and other stakeholders to generate awareness of 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 (DLRC) Meetings

DLRC meetings are Chaired by the District Collector and attended by members of the District Consultative Committee (DCC). Besides above, 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. In DLRC meetings review of the programmes under Lead Bank Scheme is carried out by getting feedback to know the pace and quality of the implementation of various programmes in the district. Hence association of non-officials is considered useful. Lead banks are required to ensure the presence of public representatives in DLRC meetings as far as possible. 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. and invite and involve them in all functions conducted by the banks in the districts, such as opening of new branches, distribution of Kisan Credit Cards, SHG credit linkage programmes etc. Responses to queries from public representatives need to be accorded highest priority and attended to promptly. The follow up of DLRC’s decisions is required to be discussed in the DCC meetings.

2.2.7 DCC/DLRC meetings- Annual Calendar of Meetings

i) DCC and DLRC are the important coordinating fora among commercial banks, Government agencies and others at district level to review and find solutions to the problems hindering the developmental activities. Therefore, it is necessary that all the members participate and deliberate in the above 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 above meetings.
ii) Lead banks have, therefore, been advised to prepare annual schedule of DCC and DLRC meetings on Calendar year basis for all districts in consultation with the Chairperson of the meetings, lead district officer of RBI and Public Representatives in case of DLRC. This yearly Calendar should be prepared in 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 seen that DCC and DLRC meetings are not held simultaneously.

2.3 State Level Bankers’ Committee (SLBC)

2.3.1 Constitution of SLBC

i) The State Level Bankers’ Committee (SLBC) has been 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 (CMD) of the convenor bank/Executive Director of the convenor bank. It comprises representatives of commercial banks, RRBs, 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 and farmers’ union etc. are special invitees in SLBC meetings for discussing their specific problems, if any. The SLBC meetings are held on quarterly basis. The responsibility of 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 State level play an important role in the development of the State, illustrative guidelines on the conduct of State Level Bankers Committee meetings have been issued.

2.3.2 Conduct of SLBC Meetings

i) The SLBC meetings are required to be held regularly at quarterly intervals. SLBC is chaired by the Chairman & Managing Director (CMD) of the convenor bank/Executive Director of the convenor bank and co-chaired by Additional Chief Secretary or Development Commissioner of the State concerned. High Level of participation in SLBC/UTLBC meetings ensure an effective and desired outcome with meaningful discussion on issues of public policy of both the Government of India and 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) In view of the large membership of the SLBC, it would be desirable for the SLBC to constitute Steering Sub Committee/Sub-Committees for specific tasks like agriculture, micro, small/medium industries/enterprises, handloom finance, export promotion and financial inclusion etc. The sub committees may examine the specific issues in-depth and devise solutions/recommendations for adoption by the full committee. It is expected to meet more frequently than the SLBC. The composition of the sub-committee 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.
iv) The secretariat/offices of SLBC should be sufficiently strengthened to enable the SLBC convenor bank to effectively discharge its functions.
v) The various fora at lower levels may give adequate feedback to the SLBC on issues that need to be discussed on a wider platform.
vi) Several institutions and academicians are engaged in research and 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 Lead Bank Scheme. 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 discussion 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.
vii) The activities of NGOs in facilitating and channeling 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. Bank's 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 Agenda for SLBC Meetings

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

1. Review of progress under financial inclusion plan (FIP).
   
2. The 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 RSETI 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 Annual Credit Plan (ACP) of the State
   
7. Regional imbalances in deployment of credit to various sectors of the economy
   
8. Credit - Deposit Ratio of the State
   
9. Flow of credit to priority sector and weaker sections of the society
   
10. Doubling of Farmers’ Income by 2022
    
11. Assistance under Government sponsored schemes
    
12. Grant of educational loans
    
13. Progress under SHG - bank linkage
    
14. Problems faced by MSME sector
    
15. Steps taken for improving land record and recovery mechanism
    
16. Timely submission of data by banks
    
17. Review of relief measures (in case of natural calamities wherever applicable) and
    
18. Issues remaining unresolved at the DCC/DLRC meetings
    

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

2.3.4 Banking Penetration

i) Over the years, the focus of Lead Bank Scheme has shifted to inclusive growth and financial inclusion. The use of Information Technology (IT) and intermediaries has enabled banks to increase 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. Such banking services may not necessarily be extended through a brick and mortar branch but can be provided through any of the various forms of ICT- based models, including through BCs. However, ICT connectivity should not be an excuse for not pursuing financial inclusion by commercial banks/RRBs.
iii) SLBC convenor banks should take up with the State Governments impeders such as issues of road/digital connectivity, conducive law and order situation, uninterrupted power supply and 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.

2.3.5 SLBC - Yearly Calendar of Meetings

i) To improve the effectiveness and streamlining the functioning of SLBC/UTLBC meetings, SLBC convernor banks have been advised to prepare a yearly calendar of programme (calendar year basis) in the beginning of the year itself, for conducting the meetings. The calendar of programme should clearly specify the cut off dates for data submission to SLBC and acceptance thereof by 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 and 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, SLBC convernor bank should write a letter in this regard to the controlling office of the defaulting banks under advice to Regional Office of RBI. 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 very senior functionaries are not able to attend the SLBC on some very 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:

Activity	To be completed by (Date)
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.	15th 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 from the 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) The objective of preparing 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 stake holders. It also ensures clear cut guidelines for submission of data to SLBC convenors by participating banks & Government Departments. It is expected to save precious time of SLBC convenors 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 circumstances preparation of agenda should be delayed beyond stipulated dates as per calendar.

2.3.6 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 SLBC website, an indicative list of the information & data 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 an indicative list and SLBCs are free to put any additional information considered relevant for the State.

2.3.7 Liaison with State Government

SLBC 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.

2.3.8 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 Lead Bank Scheme. 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 Lead Bank Scheme.
ii) Staff at the operational level of banks and government agencies associated with implementation of the Lead Bank Scheme 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 Lead Bank Scheme 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 (PLPs)

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.
ii) A pre-PLP meeting is convened by LDM during June every year to be attended by the 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. 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:

1. Controlling Offices of commercial banks and Head Office of RRB and DCCB/LDB will circulate the accepted block-wise/activity-wise potential to all their branches for preparing the Branch Credit Plans (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.
   
2. A special Block Level Bankers' Committee (BLBC) meeting will be convened for each block where the Branch Credit Plans will be discussed and aggregated to form the Block Credit Plan. DDM and LDM will 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 programmes.
   
3. All the Block Credit Plans of the district will be aggregated by LDM to form the District Credit Plan. This plan indicates an analytical assessment of the credit need of the district to be deployed by all the financial institutions operating in the district and 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.
   
4. The District Credit Plan will be placed before the DCC by the Lead District Manager for final acceptance/approval. All the District Credit Plans would eventually be aggregated into State Level Credit Plan to be prepared by SLBC convenor bank and launched by 1st of April every year.
   

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:

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) Data on Annual Credit Plan (ACP), is an important element to review the flow of credit in the State. ACP formats have been revised to align the same with the revised 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 and Renewable Energy and Others. Further, agriculture has been redefined to include (i) Farm Credit, (ii) Agriculture Infrastructure and (iii) Ancillary Activities. Micro, Small and Medium Enterprises would include manufacturing and service sector under (i) Micro Enterprises, (ii) Small Enterprises and (iii) Medium Enterprises, Khadi and Village Industries Sector (KVI) and other finance to MSMEs. Thus, at present, the reporting statements for ACP target is LBS-MIS-I (Annex III), statement for disbursement and outstanding LBS-MIS –II (Annex IV) and ACP achievement vis-à-vis ACP target LBS-MIS-III (Annex V). Lead banks/SLBC Convenor banks have been advised, to prepare the bank group wise statements of LBS-MIS –I, II and III as per prescribed formats and also place these statements 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 scheduled commercial banks and meaningful review/analysis of data, the ACP data needs to be grouped separately for scheduled commercial banks and other banks like State cooperative banks & DCCBs etc. while presenting in the DCC/SLBC meetings and submitting to our regional offices. The data of scheduled commercial banks needs to be further grouped into public sector banks, private sector banks and Regional Rural Banks to know the bank group wise position.

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 Reserve Bank of India following a detailed procedure formulated for this purpose. As on June 30, 2017, 25 public sector banks and one private sector bank have been assigned lead bank responsibility in 706 districts of the country.
ii) State Level Bankers’ Committee (SLBC)/Union Territory Level Bankers' Committee (UTLBC) as an apex level forum at 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 Convenorship is assigned to banks for this purpose. As on June 30, 2017, the SLBC/UTLBC convenorship of 29 States and 7 Union Territories has been assigned to 15 public sector banks and one private sector bank. List of State wise SLBC 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. Roadmap for opening of banking outlets in unbanked villages

i) A phase wise approach has been adopted to provide door step banking facilities in all the unbanked villages in the country. In November 2009, under Phase-I, guidelines for preparation of Roadmap for providing banking services in villages with population more than 2000 was issued. After successful completion of Phase-I by March 2012, a roadmap to provide banking services in unbanked villages with less than 2,000 population was rolled out in June 2012. Accordingly, SLBC Convenor banks and lead banks were advised to complete the process of providing banking services in unbanked villages with population below 2000 (Phase II) by August 14, 2015.

5.1 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 in financial inclusion, it was decided to focus on villages with population above 5000 without a bank branch of a scheduled commercial bank. 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 also ensure close supervision of BC operations. Accordingly, SLBC Convenor banks were advised to identify villages with population above 5000 without a bank branch of a scheduled commercial bank in their State and allot these villages among scheduled commercial banks (including Regional Rural Banks) for opening of branches.

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

In terms of circular DBR.No.BAPD.BC.69/22.01.001/2016-17 dated May 18, 2017 issued by DBR on ‘Rationalisation of Branch Authorisation Policy - Revision of Guidelines’, final guidelines on ‘Banking Outlets’ have been issued with a view to facilitate financial inclusion as also to provide flexibility to banks on the choice of delivery channel.
In the circumstances, SLBC Convenor banks are advised to review and identify the unbanked rural centres (URCs) in villages with population above 5000, in light of the revised guidelines on rationalisation of branch authorisation policy and ensure that such unbanked rural centres in villages with population above 5000, if any, are banked forthwith by opening of CBS enabled banking outlet. A confirmation stating that all unbanked rural centres in villages with population above 5000 have been banked, may be furnished to the respective Regional Office of Financial Inclusion and Development Department of Reserve Bank of India latest by December 31, 2017.

6. Credit Deposit Ratio

6.1 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. While it is not necessary that this ratio should be achieved separately branch-wise, district-wise or region-wise, the banks should nevertheless, ensure that wide disparity in the ratios between different States / Regions is avoided in order to minimise regional imbalance in credit deployment. The credit dispensation in certain districts is very low, as a result of various factors such as lack of necessary infra-structure, varying ability of different regions to absorb credit, etc. The banks may review the performance of their bank branches in such areas and take necessary steps to augment the credit flow. The lead banks may discuss the problem in all its aspects with the other financial institutions in the district and also in the DCC forums.

6.2 Implementation of the recommendations of Expert Group on CD Ratio

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

Institution / Level	Indicator
Individual banks at Head Office	Cu + RIDF
State Level (SLBC)	Cu + RIDF
District Level	Cs

Where:
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) Special Sub- Committee (SSCs) of DCC should be set up in the districts having CD ratio less than 40, in order to monitor the CD ratio and to draw up Monitorable Action Plans (MAPs) to increase the CD ratio. The Lead District Manager is designated as the convenor of the SSC, which in addition to District co-ordinators of banks functioning in the area, will comprise of 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-Committee are as under:

• The Special Sub-Committee (SSCs) will draw up Monitorable Action Plans (MAPs) for improving the CD ratio in their districts on a self-set graduated basis.
  
• For this purpose the SSC will hold a special meeting immediately after its constitution and on the basis of the 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 for the CDR beyond 60 in annual increments.
  
• Consequent on the completion of this process, the target and time frame self set by the SSC 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 on quarterly basis and through them to the convenor of SLBC.
  
• On the basis of the feedback received from the DCC regarding the progress in the implementation of the Monitorable Action Plans (MAPs), consolidated report will be prepared and tabled at all SLBC meetings for discussion / information.
  

iii) As regards the districts with CD ratio less than 20, these 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 (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. Given a collaborative framework as outlined above, the Group was of the view that meaningful increase in CD ratio is possible.
  
• Progress in the special category districts 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.
  

7. Direct Benefit Transfer

Direct Benefit Transfer (DBT) was rolled out by Government of India in selected districts since January 2013. SLBC Convenor banks were advised to co-ordinate with the 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/Direct Benefit Transfer (DBT) implementation. As a prerequisite to the implementation of the 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 account opening and seeding Aadhaar number in all the DBT districts.
  
• closely monitor the progress in seeding of Aadhaar number in bank accounts of beneficiaries.
  
• put in place a system to provide acknowledgement to the beneficiary of seeding request and also send confirmation of seeding of Aadhaar number.
  
• 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 names and other details of business correspondents (BCs) engaged/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'.
  

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 scheduled commercial banks including Regional Rural Banks. Under SAA, each bank branch in rural and 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. The SAA scheme was reviewed from time to time and appropriate changes were made in the scheme to make it more effective.

ii) 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 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 ‘No Due Certificate’ from the individual borrowers (including SHGs & 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 ‘No Dues Certificate’. Further, it is clarified that the policy of dispensing with 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 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
  
• 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), as required in terms of extant instructions issued by RBI.

9. Doubling of Farmers’ Income by 2022

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 have been taken towards attaining this objective including setting up of an inter-ministerial committee for preparation of a blue print for the same. This agenda has also been reiterated by the government in several forums and has acquired primacy from the point of view of rural and agricultural development.
ii) The strategy to achieve this goal, inter-alia, include,

• 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 develop infrastructure such as e-platform across 585 stations
  
• Strengthening of crop insurance scheme to mitigate risks at affordable cost
  
• Promotion of ancillary activities like poultry, bee-keeping and fisheries.
  

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 financial sector, should therefore be leveraged to further the objective of doubling farmer’s income by 2022. Lead banks are accordingly advised to ensure the following:

1. Work closely with NABARD in preparation of Potential Linked Plans (PLPs) & Annual Credit Plans keeping the above strategy in consideration.
   
2. Include ‘Doubling of Farmer’s Income by 2022’ as a regular agenda under Lead Bank Scheme in various forums such as SLBC, DCC, DLRC and BLBC.