- The Lead Bank Scheme, introduced towards the end of 1969, envisages assignment of lead roles to individual banks (both in public sector and private sector) for the districts allotted to them.
- A bank having a relatively large network of branches in the rural areas of a given district and endowed with adequate financial and manpower resources has generally been entrusted with the lead responsibility for that district.
- Accordingly, all the districts in the country have been allotted to various banks.
- 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.
- The main objective was to extend banking facilities to unbanked areas and also to evaluate their physiographic, agro climatic end Socio-economic conditions through economic survey.
- To help in removing regional imbalances through appropriate credit deployment.
- Development of co-operation amongst financial and non-financial institutions, in overall development of the districts were also needed.
- A monitoring mechanism to periodically assess and evaluate the progress made in achieving the roadmap to provide banking services within the time frame prescribed.
- Identification of Non-banked/under banked areas for providing banking services in a time bound manner with a view to achieving 100% financial inclusion.
- Review of performance of banks under Annual Credit Plan (ACP)
- The flow of credit to priority sector and weaker sections of the society
- Grant of educational loans
- Progress under SHG – bank linkage
- Lead bank scheme spread the availability of banking facilities all over the country.
- Lead bank Inter link the Commercial and Cooperative banks.
- It helps in more effective Branch Expansion.
- Better relationship between Govt. and Banks.
- Integration of credit activities of banks.
- Bottlenecks in the development of a District can be located and removed.
- Lead Bank Scheme would assist in implementation of the District Plan.
- Confusion regarding the concept of Lead Bank especially for opening branches
- Problems in allotment of Districts.
- Lack of coordination between district planning authorities and banking institutions operating in a district on one side and between NABARD and the Lead Bank on the other.
- Lead bank did not consider the role of co-operatives, which are important source of institutional finance.
- Shift in policies, complexities in operations and issues shifting to the Financial Inclusion.
- Duplication of efforts in credit plan preparation.
- Absence of check and balance.
Usha Thorat Committee on Lead Bank Scheme