The Reserve Bank of India (RBI) on Friday released draft guidelines to streamline the operations of the Lead Bank Scheme (LBS). The LBS aims to coordinate the activities of banks, the government, and other developmental agencies through institutional mechanisms within the framework to improve credit flows to priority sectors, support inclusive growth, and deepen financial inclusion.
The RBI has invited comments and feedback on the draft circular by March 6, 2026.
The proposed framework seeks to refine the Scheme’s objectives, strengthen the structure and functioning of its various mediums, clearly define the roles and responsibilities of key stakeholders, and enhance the effectiveness of State Level Bankers’ Committees (SLBCs) and Lead District Manager (LDM) offices.
Introduced in December 1969, the LBS was designed to create a coordinated mechanism among banks and government agencies to improve the flow of credit to priority sectors and support rural development. Its core mandate is to deepen financial inclusion by improving access to and usage of formal financial services.
Under the draft norms, SLBC convenor banks must hold quarterly SLBC meetings and ensure close coordination among all banks operating in the state. They are also expected to regularly engage with state government officials to address operational challenges in lending and to support broader banking development and inclusion goals.
The draft further emphasises monitoring of the credit–deposit (CD) ratio—an indicator of credit disbursed relative to deposits mobilised. Banks have been asked to work toward achieving a CD ratio of up to 60% across rural and semi-urban branches. Districts with CD ratios between 40% and 60% will be placed under closer monitoring to improve performance.