Lead Bank Scheme (LBS) was introduced in 1969, based on the
recommendations of the Gadgil Study Group.
National Credit Council (NCC) in Lead Bank Scheme:
The National Credit Council was set up in December 1967.
To determine the priorities of bank credit among various sectors of the economy.
The NCC had appointed a study group in October 1968 under the chairmanship
of Prof. D. R. Gadgil – to suggest an appropriate organisational framework for
effective implementation of social objectives.
Report was submitted in October 1969.
Gadgil Study Group – outcome & recommendation
Outcome of the Study Group: as on June 1967
Nationalized banks provide 83% of total credit.
Banking facilities not available to 617 of 2700 towns.
Commercial Banks had penetrated only 5000 villages (negligible @ 1%)
Besides, the credit needs of Agriculture, SSI and allied activities – neglected.
1) Banks should provide integrated banking facilities in unbanked areas.
2) Adoption of ‘Area Approach’- in unbanked areas – each bank should adopt an
3) Help agriculture and SSI.
4) ‘District’ identified as the smallest geographical unit for the scheme.
Objectives of Lead Bank Scheme
Sri. F. K. F. Nariman Committee appointed by RBI – In the same year.
Same recommendations were given.
Nationalized Banks should act as a ‘Lead Bank’.
336 Districts to be distributed between nationalized banks.
Objectives of Lead Bank Scheme:
1) Eradication of unemployment and under employment.
2) Appreciable rise in the standard of living for the poorest of the poor.
3) Provision of some of the basic needs of the people who belong to poor sections
of the society.
LB – as a Consortium Leader
Lead Bank – Consortium Leader:
Each district had been assigned to different banks (public & private).
--- co-ordinating the efforts of all credit institutions
a. for expansion of branch banking facilities
b. for meeting the credit needs of the rural economy
Allotment of Districts:
All the districts in the country.
Except – metropolitan cities of Mumbai, Kolkata, Chennai and Union Territories
of Chandigarh, Delhi and Goa.
Later on, Union Territories of Goa, Daman and Diu, Delhi & Chandigarh – also
brought into purview of LBS.
Banks were allotted Districts in the basis of:
1. The capacity of the Bank – popularity of the bank in the area.
2. Geographical continuity of the Districts forming clusters.
3. If possible each Bank to operate in more than 1 State.
4. If possible to have more than 1 Bank in one State.
Lead Banks were to first undertake an impression survey of whole District.
Then a detailed survey regarding saving potential, credit requirement, credit
gaps or surplus.
District Consultative Committee (DCC’s):
Constituted in the lead districts during 1971-73.
To facilitate co-ordination of activities of all the Banks and the Financial
Institutions & Govt. departments.
1) Survey resources and development of banking in the area.
2) Survey the dependency on money lenders by industrial units, farms etc.,
3) Survey the facilities for storing (fertilizers & agricultural inputs), marketing,
credit facilities for marketing.
4) Offering training to staff for advice to small borrowers & farmers in priority
5) Assist other agencies and involve co-operative banks, RRB’s, SFC’s, KVIB,
1. Spread the availability of banking facilities all over the country.
2. Inter link the Commercial and Cooperative banks.
3. More effective Branch Expansion.
4. Better relationship between Govt. and Banks.
5. Integration of credit activities of banks.
6. Bottlenecks in the development of a District can be located and removed.
7. Lead Bank Scheme would assist in implementation of the District Plan.
District Credit Plan (DCP’s)
First implemented in 1974.
DCP – consists of technically & economically viable schemes which can be
taken up for financing.
It is a plan of bankable schemes in agriculture, industry and service sectors of
The schemes can be taken up by different financial institutions in the District.
Implement the programme in collaboration with other institutions.
Monitor progress & evaluate progress in achieving targets.
Progress of Lead Bank Scheme
1. By 1974 - 90% of geographical areas in Assam, Bihar, W. Bengal, Orissa, M.P.,
2. 2 study groups appointed by RBI in Gujarat & Maharastra concluded:
a) Lead Banks were successful in identifying potential area for new branches.
b) Formulation & implementation of DCP’s was slow.
They suggested preparation of Annual Action Plans followed by Annual Credit
By mid 90’s the Lead Bank Scheme covered 493 Districts.
As on June 30, 2014, 25 public sector banks and one private sector bank have
been assigned lead bank responsibility in 671 districts of the country.
Problems – Lead Bank Scheme
Confusion regarding the concept of Lead Bank especially for opening branches –
ambiguous scope & objectives.
Co-ordination & effective functioning between banks & F.I’s – not just providing
Problems in allotment of Districts.
Expertise – knowledge on the district, agriculture, projects, etc.,
Problems in preparation and uniformity of DCP’s.
Did not consider the role of co-operatives – important source of institutional
Service Area Approach (SAA)
1980’s shortcomings of LBS identified.
SAA introduced in April 1989.
Every branch and RRB allotted 15 to 25 districts = Service Area.
Survey of villages, then village-wise credit plans prepared.
Credit plan to be monitored by Lead Bank.
1. Branch can be concentrate on development of a village.
2. Duplication can be avoided.
3. Lending can be organized and planned.
4. End – use better controlled.
Today banks have to open 25% of their branches in a year, in unbanked rural area
Usha Thorat Committee
The GOI – constituted a High Power Committee headed by Mrs. Usha Thorat,
Deputy Governor of RBI.
To suggest reforms in the Lead Bank Scheme.
Sharper focus on facilitating financial inclusion rather than a mere review of the
govt. sponsored credit schemes.
(Reason: most forums to monitor the implementation of LBS are being used for
routine review of the govt. sponsored schemes, credit deposit ratio, recovery
performance among others.Lending under such schemes constitute 0.4% of the
total priority sector lending.)
Usha Thorat Committee
LBS should be continued to accelerate financial inclusion in the unbanked areas
of the country.
Private sector banks should be given a greater role in LBS action plans,
particularly in areas of their presence.
Enhance the business correspondent model, making banking services available
in all villages having a population of above 2,000 and relaxation in KYC (know
your customer) norms for small value accounts.
“ The review on LBS has been made with a focus on financial inclusion
and in view of the recent developments in the banking sector. The scheme has
been found useful to promote financial inclusion in the country. Hence it
should be continued”
Usha Thorat May 22, 2009
Details of Lead Banks in Tamil nadu
Quarter ended December 2012
SR District Name
Name of Lead Bank Name of LDM Contact Details
Tel MOBILE e-mail Address
1 ARIYALUR 943
STATE BANK OF
15, HUMTERS ROAD,
DOVETON, CHENNAI - 600
3 COIMBATORE 920 CANARA BANK
BAWAHAN, OPP TO
4 CUDDALORE- 906 INDIAN BANK
NO. 4 BHARATHY ROAD,
5 DHARMAPURI 916 INDIAN BANK Mr. MUTHARASU
6 DINDIGUL 939 CANARA BANK JOHN NELSON 0451-2426760
SALAI ROAD, Dindigul 624
7 ERODE 924 CANARA BANK M SELVARAJU
76 PARK ROAD, Erode 638
8 KANCHEEPUR 903 INDIAN BANK
510/511 GANDHI ROAD,
Kancheepuram 631 501
N DEVANATH 04652-233461
64/B FIRST FLOOR,
CHRISTU NAGAR MAIN
ROAD , NAGERCOIL -
10 KARUR 912
12J, EIGHTY FEET ROAD,
Karur 639 002
11 KRISHNAGIRI 950 INDIAN BANK T RUDRAPPA
04343 - 236074 -
410, FIRST FLOOR,
Krishnagiri 635 001
12 MADURAI 930 CANARA BANK C MANOKARAN 0452-2330335
118, WEST PERUMAL
MAISTRY ST., Madurai
584, PUBLIC OFFICE
Nagapattinam 611 001
14 NAMAKKAL 915 INDIAN BANK R ARIVALAGAN 04286-221866
31, RENGAR SANNATHI
ST., Namakkal 637 001
15 NILGIRIS 918 CANARA BANK K MOHAN 0423-2443633
Nilgiris 643 001
NAGAR, Perambalur 621
17 PUDUKOTTAI 938
S. RAMASAMY 04322-221777
NEAR VICTORIA ARCH,
Pudukkottai 622 001
3-A SANNATHI STREET,
Ramanathapuram 623 501
19 SALEM 913 INDIAN BANK
3RD FLOOR, FORT MAIN
ROAD, Salem 636 007
20 SIVAGANGA 922
C' BLOCK, NO. 6,
ROAD, Sivanganga 630 561
21 THANJAVUR 908
85 B MARKET ROAD
THANJAVUR , 6130001
22 THENI 942 CANARA BANK
365-A MADURAI ROAD,
Theni 625 531
919 INDIAN BANK C.SEKHAR 04175-222647
47, SANNATHI STREET
Thiruvannamalai 606 601
215, MADURAI ROAD,
Tiruchirapalli 620 001
131, EAST CAR STREET,
II FLOOR, Tirunelveli 627
26 TIRUPPUR 305 CANARA BANK V GANESAN
CANARA BANK MAIN
ROAD, Tiruppur 641 604
27 TIRUVALLUR 902 INDIAN BANK T.R. SURESH 27663382
2, PANAGAL STREET,
Thiruvallur 602 001
28 TIRUVARUR 907
ROAD, Tiruvarur 610 001
29 TUTICORIN 933
STATE BANK OF
SME BRANCH , FIRST
FLOOR, 360 BEACH
30 VELLORE 904 INDIAN BANK T. MAHENDRAN 0416-2223044
46-51, KATPADI ROAD,
TKM COMPLEX, Vellore
940 INDIAN BANK A RAJENDRAN
VVA TOWER, 793,
Villupuram 605 602
P SULAIMAN 04562-244645
ROAD, Virudhunagar 626
• S. Subba Reddy, P. Raghu Ram, Agricultural Finance and Management, pg. no.