Objective, Role and Function of Lead Bank Scheme

Objective, Role and Function of Lead Bank Scheme

This article focuses on the Objective and Function of “Lead Bank Scheme”. You can also learn here the full form of LBS, History of Lead bank scheme, and Lead bank scheme definition. Here, I will also share the information about the role of Lead bank scheme, objectives of the Lead bank scheme and the Lead bank scheme functions. If you want to know List of Total banks in India then you can click on given link to know more because I have already written an article on the List of banks in India. Let’s read the full article to get more information about the Lead bank scheme.

Objective, Role, and Function of ‘Lead Bank’ Scheme

Lead Bank Scheme:

Lead Bank Scheme (LBS) was introduced in 1969 based on the recommendations of the Gadgil Committee.

Lead Bank Scheme (LBS), which was introduced in 1969, has envisaged assigning the main role of numerous banks (both public sector and private sector) for the allotted districts. A bank which is a relatively large network of branches in rural areas of a given district and is endowed with adequate financial and manpower resources, it is generally assigned the main responsibility of that district.

What is the Lead bank scheme in India?

The National Credit Council was established in December 1967 to determine the priorities of bank loan between different sectors of the economy.  In October 1968, NCC appointed a Committee on the implementation of social objectives by professor D R Gadgil.

It is a concept given by the Gadgil committee. In which all the district of a country has been allocated to the banks by the government to co-ordinate. The development program run by the government for the welfare of the weaker section of society.

The lead bank acts as a leader for coordinating the efforts of all credit institutions in the allotted districts to increase the flow of credit to agriculture, small-scale industries and other economic activities included in the priority sector in the rural and semi-urban areas, with the district being the basic unit in terms of geographical area.

Objectives of Lead Bank Scheme: lead bank scheme

  1. Eradication of unemployment
  2. An appreciable rise in the standard of living for the poorest of the poor
  3. Provision of some of the basic needs of the people who belong to poor sections of the society

Role and Function of Lead Bank: lead bank scheme

  1. A monitoring mechanism to periodically assess and evaluate the progress made in achieving the roadmap to provide banking services within the time frame prescribed.
  2. Identification of Non-banked/underbanked areas for providing banking services in a time bound manner with a view to achieving 100% financial inclusion
  3. The specific issues inhibiting and enabling IT enabled financial inclusion
  4. Issues to facilitate ‘enablers’ and remove/minimize  ‘impede-rs’ for banking development for inclusive growth
  5. Monitoring initiatives for providing ‘Credit Plus’ activities by banks and State Governments such as setting up of Credit Counseling Centers and RSETI type Training Institutes for providing skills and capacity building to manage businesses.
  6. Review of performance of banks under Annual Credit Plan (ACP)
  7. The flow of credit to priority sector and weaker sections of the society
  8. Assistance under Government sponsored schemes
  9. Grant of educational loans
  10. Progress under SHG – bank linkage
  11. SME financing & bottlenecks thereof, if any
  12. Timely submission of data by banks
  13. Review of relief measures (in case of natural calamities  wherever applicable)
Key Points: lead bank scheme
  1. There is a strong need to revamp and revitalize the Lead Bank Scheme so as to make it an effective instrument for bringing about meaningful coordination among banks operating in a district.
  2. This can bring about greater participation among banks and financial institutions in achieving full financial inclusion.
  3. Operation problems are the major hurdles of the Lead bank Scheme. Obviously, financial inclusion calls for united action on the part of all banks and financial institutions operating in a district.
  4. An approach to the lines of area approach can be adopted and in each area or location a particular bank can be given responsibility for achieving meaningful financial inclusion
  5. Full computerization and data management in all banks must be in order and the banks involved should be able to periodically prepare and review reports, yearly draft plans, and financial inclusion plans, from time to time.
  6. There is a need for revamping the District-level Consultative Committees (DLCC) and it should be a result oriented rather than a titular organization.
  7. Lead bank Scheme should be an effective instrument in bringing about the full and active involvement of all member banks in all efforts and schemes. lead bank scheme

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