For financial inclusion, revamp lead bank scheme

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: Banking reforms etched on global integration have the potential of distancing the socio-economic goals of the country, notwithstanding the 8.5-9% growth attained during the last three years. The recent review of priority sector requirements and fresh guidelines to banks issued by the RBI has to be reinforced with appropriate review mechanisms. In the broad scheme of things what it omitted to review was the working of Lead Bank Scheme (LBS), which had its focus in the 1970s on branch expansion in rural areas and in the 90s on Service Area Planning that was given a go-by post-2000.

The focus is shifting fast to ensuring financial inclusion and a host of other issues pertaining to credit for the farm and SME sectors. But the way the LBS is currently under implementation is not different from what it was two and half decades ago. The district collector as chairman witnesses a laborious and routine review of the targets set for government programmes like the SGSY, credit targets under SC Action Plan, Tribal Sub-Plan, identification of target groups by various agencies and non-implementation of targets for various reasons that get repeated meeting after meeting and with similar excuses. The District Collector depending on the situation exhorts the concerned agencies to show better performance for the next review meeting. The Credit Plans prepared invariably reflect a target hike from the previous year by certain minimum percentage. These plans are supposed to be dovetailed with the Potential Linked Plans (PLP) of Nabard introduced since the mid-1980s. But the Annual Credit Plans of the Lead Bank and the PLPs of Nabard are two independent exercises. The District Planning Officer of the state government outlines the plan for sectoral and infrastructure development.

Plan preparation in isolation by different agencies is a wasteful exercise. As a first step, it is necessary to reinforce close 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. Duplication of efforts in credit plan preparation should be avoided by empowering the plan team at the district level appropriately.