RBI to Overhaul Lead Bank Scheme for Enhanced Effectiveness

The Reserve Bank of India (RBI) has reportedly released draft guidelines to update the Lead Bank Scheme (LBS), which coordinates banking and development activities at the district level. The scheme was introduced in 1969 to improve credit flow to priority sectors and expand banking services in rural and semi-urban areas. 

The draft proposes changes to the structure, membership, and agenda of the forums operating under the scheme. As per the news reports, it also seeks to define the roles of officials more clearly to improve coordination across banks and government departments. 

Role of Lead Banks at District Level 

Under the framework, 1 commercial bank in each district is designated as the Lead Bank. This bank is responsible for coordinating credit activities among financial institutions, government bodies, and development agencies. 

The draft places emphasis on aligning credit plans with local economic activity. District-level planning will be based on estimates of credit potential across different blocks and sectors. 

Credit-Deposit Ratio to Remain a Key Metric 

Banks will continue to track the Credit-Deposit (CD) Ratio under the revised scheme. The ratio measures how much of the deposits collected by banks are deployed as loans. 

The RBI has kept the benchmark at 60% for rural and semi-urban branches on an all-India basis. The measure is intended to ensure that deposits raised in these regions are channelled back into local lending. 

Strengthening State-Level Coordination 

The draft also proposes a stronger role for State Level Bankers’ Committees (SLBCs) and Lead District Manager offices. SLBC convenor banks will review operational issues, coordinate with state officials, and support efforts to expand banking coverage. 

They may also flag local constraints such as road access, digital connectivity, power supply, or security issues that could affect financial inclusion efforts. 

Comments Invited till March 6 

The RBI has invited comments on the draft guidelines until March 6, 2026. The revision is for improving coordination under the scheme and supporting credit flow to priority sectors across districts. 

Read More: RBI Proposes New Framework to Modernise Kisan Credit Card Scheme! 

Conclusion  

Feedback on the proposed changes has been invited until March 6, 2026. The revised guidelines will determine the operational structure of the scheme going forward. 

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