Lead Bank Scheme :
The lead Bank scheme was introduced in December 1969 to promote integrated development of each district of the country. Under this scheme, a commercial bank was assigned the lead role in a district and all other financial institutions works jointly under the lead banks.
In the pre- nationalisation days the banking facilities in India were not evenly distributed in different parts of the country. There was a large unbanked area. After nationalising the bank’s in 1969 , the government strived to expand the geographical coverage of the banking system so as to provide banking facilities to unbaked backward areas.
Initially lead banks were :
- State bank group I.e State bank of India and it’s 7 subsidiaries
- 14 Nationalised Banks
- 3 private sector banks.
At present public sector banks are playing the role of lead banks.
The lead bank scheme was introduced in 398 districts of the country excluding greater Bombay, Calcutta , Madras, Delhi, Chandigarh and Goa. At present there number of districts covered by the scheme are 588.
The Reserve Bank is responsible to prepare the scheme. The Reserve Bank nominates a particular banks as a leader banks for one district in different states of the country. A district is allocated to a particular bank taking into account the resources man and capital, location of the district, the presence of the bank in the area etc. While making allotment, the Reserve Bank ensures that each bank plays role in more than one state and each state has more than one lead bank.
Objectives of Lead Bank :
The lead bank was initiated primarily to extend banking facilities to the book and corner of the country. The basic objectives of the scheme are stayed below –
- Opening of bank scheme in the allotted district.
- Mobilisation of savings in the alloted district.
- Extending financial assistance /credit facilities for the development of the allotted districts.
- Maintaining liasion with district administration and promoting district development programmes.
- Coordinating the activities of commercial banks ,cooperative bank’s and other financial institutions in the allotted districts.
Functions of Lead Bank :
The main functions of a lead bank are as follows :
- To ascertain the availability of resources and the scope of development of banking in the allotted district.
- To ascertain the credit needs of business and industrial units in the allotted districts and also the dependence of these units on money lenders.
- To make provisions for storage and marketing of agricultural and industrial products and arrange credit facilities for them.
- To make provisions for storage of agricultural implements as well as repairing and servicing of the agricultural equipments.
- To make provision for training of small farmers and other small borrowers so as ensure proper utilisation of funds.
- To provide assistance to other lending institutions of the allotted districts.
Working And Performance :
The lead bank prepare the district credit plan taking into account the prospects of agricultural and industrial sectors of the allotted districts. In each district a District advisory committee is constituted comprising representative of Government officers, concerns government or semi government departments , commercial Banks and other financial institutions. These committee provides a platform for discussion of matters related to the development of the district. The lead bank, after consultations,identify the grow centres, prepare the Plan for economics development and determiners the role of the banks.
The performance of the lead bank scheme is analysed here under :
Branch Expansion :
The lead bank is responsible for expansion of banking facilities in the allotted districts. The lead bank scheme has contributed a lot in wide disbursal of banking facilities. The number of bank branches in July 1969 was 8262 of these 1860 were in rural areas and 3344 were in semi urban areas. In March 1986, number of rural branches increased to 29633 . The number of bank branches was 60884 in March 1993 and of these 35313 were in the rural areas and 11314 in the semi urban areas. The bank branches increased to 93080 at the end of March 2011 and of these 43.7 % were in rural and unbanked areas.
Deposit Mobilisation :
Deposit mobilisation was one of the important objective of the lead bank scheme. Expansion of banking facilities resulted in increasing solvency of the banks, greater public confidence on banks and development of banking habits among the people. As a result of these, banks in different parts of the country mobilised huge savings. The amount of deposits in 1969 was only Rs 4646 crore. The deposits increased to Rs 315132 Crore at the end of March 1994 and further to Rs 1575143 Crore by the end of March 2004. As on March, 2011 the deposits of banks stood at Rs 5207969 Crore. The lead bank scheme was introduced in 398 districts of the country excluding greater Bombay, Calcutta , Madras, Delhi, Chandigarh and Goa. At present there number of districts covered by the scheme are 588.
Credit Deployment :
Credit facilities for different activities has also been granted with the increase in bank branches and deposit mobilisation. Financial assistance to the priority sectors specially the agriculture, small and cottage industries, rural artisans etc gained momentum with the introduction of the lead bank scheme. The amount of credit granted to the priority sectors was Rs 441 Crore in 1969. It increased to Rs 53875 Crore in March 1994 and further to Rs 632647 Crore as on March 2007.
Problems In Lead Bank Scheme :
- Lack of trained and efficient personnel.
- Faulty appraisal of projects and weak supervision of end use of loans.
- Absence of transport and communication facilitates in certain areas.
- Lack of coordination between bank’s, Government departments and other agencies.
The lead bank can play a critical role in local development and therefore should overcome all the hurdles and aim at achieving it’s broad objectives.
Frequently Questions And Answers :
1. What is the basic Aim of lead bank scheme?
Ans: To promote integrated development of each district of the country.
2. How many districts covered by Lead Bank scheme?
Ans: At present 588 districts covered by lead bank scheme.
3. How many districts lead bank scheme was introduced?
Ans: The lead bank scheme was introduced in 398 districts of the country .
4. What is District Credit plan?
Ans: The lead bank prepare the district credit plan taking into account the prospects of agricultural and industrial sectors of the allotted districts.
5. What is Branch Expansion mean?
Ans: The lead bank is responsible for expansion of banking facilities in the allotted districts.
6. How many branches of Lead Bank scheme?
Ans : As per record of 2011 The bank branches of lead bank scheme was 93080 .
7. What is the main problems in lead bank scheme?
Ans: Lack of trained and efficient person in Lead Bank scheme.