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Assignment 2

The document outlines the working of the Lead Bank Scheme in India, including the meaning, different committees involved like BLBC and DCC, the various meetings held, and plans like PLP and ACP. The Lead Bank Scheme aims to coordinate bank activities to enhance credit flow to priority sectors. A lead bank is assigned for each district. BLBC, DCC, and SLBC committees are formed at block, district and state levels for coordination. Regular meetings are held and annual plans are made to review targets and achievements.

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36 views5 pages

Assignment 2

The document outlines the working of the Lead Bank Scheme in India, including the meaning, different committees involved like BLBC and DCC, the various meetings held, and plans like PLP and ACP. The Lead Bank Scheme aims to coordinate bank activities to enhance credit flow to priority sectors. A lead bank is assigned for each district. BLBC, DCC, and SLBC committees are formed at block, district and state levels for coordination. Regular meetings are held and annual plans are made to review targets and achievements.

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PRACHI DAS
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Assignment 2

Q. Please briefly outline the working of Lead Bank Scheme? Two Page Write up in Bullets
Points or Small Para. Frame your answer around: Meaning & Definition, Different
Committee, Meetings, Purpose, ACP & PLCP as discussed.
Ans.
a) Meaning and Introduction:-
 The Lead Bank Scheme was announced by the 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 the priority sector and other sectors and to sponsor bank’s role in
the overall development of the rural sector.
 For coordinating the activities in the district, a particular bank is assigned ‘Lead
Bank’ responsibility of the district.
 Predicting greater role for private sector banks, Lead Banks were advised to ensure
that private sector banks are more closely involved in the implementation of the Lead
Bank Scheme.
 Private sector banks should involve themselves more actively by leveraging on
Information Technology bringing in their expertise in strategic planning.
b) Different Committee:-
i) Block Level Bankers’ Committee (BLBC):
 Block Level Bankers’ Committee (BLBC) is a forum for achieving coordination
between credit institutions and field level development agencies at the block level.
 The forum prepares and reviews the implementation of the Block Credit Plan and
also resolves operational problems in the implementation of the credit
programmes of banks.
 The Lead District Manager (LDM) of the district is the Chairman of the Block
Level Bankers’ Committee.
 All the banks operating in the block including the Small Finance Banks, Wholly
Owned Subsidiaries (WOS) of Foreign Banks, RRBs, the District Central Co-
operative Banks, 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.
 To strengthen the BLBC forum it is necessary that all branch managers attend
BLBC meetings and enrich the discussions with their valuable inputs.
 Participation by the District Development Manager (DDM) of NABARD in
BLBCs would ensure better and more meaningful discussions for the development
of the Block.
 The Lead District Officer (LDO) of the Reserve Bank of India (RBI) selectively
attends the BLBC meetings.
ii) DCC(Directive Consulative Committee):
 Constituted in the early seventies as a common forum at the 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 including Small
Finance Banks Wholly Owned Subsidiaries (WOS) of Foreign Banks, RRBs,
Payments Banks, co-operative banks including the District Central Cooperative
Bank (DCCB), 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.
iii) State Level Banker’s Committee:
 The State Level Bankers’ Committee (SLBC) was 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/ Executive Director of the Convenor Bank.
 Representatives of various organizations from different sectors of the economy
like industry bodies, retail traders, exporters, farmers’ unions, etc. are special
invitees in the SLBC meetings for discussing their specific problems, if any.
SLBC meetings are held on quarterly basis.
c) Meetings:-
 DCC meetings should be convened by the Lead Banks at quarterly intervals.

 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.
 DLRCM(District Level Review Committee Meetings): 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 banking outlets,
distribution of Kisan Credit Cards, SHG credit linkage programmes, etc.
 Annual Calender Meetings: Lead Banks have been advised to prepare an 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 the
RBI and Public Representatives in case of DLRC.
 SLBC meetings are required to be held regularly at quarterly intervals.
 The meetings are chaired by the Chairman/ Managing Director/ Executive
Director of the Convenor Bank and co-chaired by the Additional Chief Secretary
or Development Commissioner of the State concerned.
 State Level Bankers’ Committee meetings should primarily focus on policy issues
with participation of only the senior functionaries of the banks/ Government
Departments.
 Yearly Calender of Meetings: To improve the effectiveness and streamline the
functioning of SLBC/UTLBC meetings, SLBC Convenor Banks have been
advised to prepare a yearly calendar of programmes (calendar year basis) in the
beginning of the year itself, for conducting the meetings.
d) PLCP(Potential Linked Credit Plan): 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.
 While preparing the PLPs, the focus must be on identifying processes and projects
that:
a. reduce the carbon foot-print,
b. prevent the overuse of fertilizers,
c. ensure efficient utilisation of water and
d. address agricultural pollution issues.
e) Annual Credit Plan(ACP):
 It is an important element to review the flow of credit in the State.
 ACP formats are aligned with the extant reporting guidelines on priority sector
lending.
 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, Renewable Energy and Others.
 In order to maintain consistency and integrity of data with the All-India data of
scheduled commercial banks and facilitate a 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.

According to the ACP, it 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,
Renewable Energy and Others. Further, it has been decided that bank loans
to be furthered to Micro/Small and Medium Enterprises (Services), engaged in
providing or rendering of services as defined in terms of investment in
equipment under MSMED Act, 2006,that shall qualify under priority sector
without any credit cap.

This plan is then broken down to quarterly targets (like Q1, Q2, Q3, Q4) and
achievements are matched which are reviewed bank –wise and accordingly
the progress is communicated to their Head Offices.

Later, in each district and block, all the identified villages have been provided
with banking services through branches, business correspondents or through
other modes such as ATMs and mobile vans.

With disruption in the financial sector, brick and mortar branches have
become an integral component of financial inclusion, as 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
ensuring 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.

Thus, to ensure smooth banking operations in rural and semi-urban areas


under ACP, Potential linked credit is required to be supplemented for a
particular district which is then combined and financed with bank credit
available, hence to increase credit growth which would then lead to economic
development.

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