The Reserve Bank of India vide its notification dated 1st April 2021 has issued Master Circular on Lead Bank Scheme which has consolidated the relevant guidelines/ instructions issued by Reserve Bank of India on Lead Bank Scheme up to March 31, 2021.
The Objectives of the lead bank scheme are as follows:
- The prime objective of the ‘Lead Bank Scheme’ is to provide adequate banking and credit in rural areas through the adoption of the ‘Area Approach’ with one Bank assigned for one area.
- The Lead Bank Scheme also aims at removing regional imbalances through appropriate credit deployment.
- State Level Bankers’ Committee (SLBC)/Union Territory Level Bankers’ Committee (UTLBC), as an apex level forum at the 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.
- Banks have been advised to achieve a CD Ratio of 60 percent in respect of their rural and semi-urban branches separately on an All-India basis.
- The Potential Linked Credit Plans are a step towards decentralized credit planning with the basic objective of mapping the existing potential for development through bank credit. PLPs are expected to emphasize the promotion of sustainable agricultural practices suitable to local conditions.
