High level committee recommends improvements in LBS

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A high level RBI committee has favored that lead banking scheme should be continued to accelerate financial inclusion in the unbanked areas of the country.

Lead banks are those lenders, assigned by RBI in a specified areas to promote banking services and financial literacy. These banks will have strong presence in the respective regions. Reserve Bank launched lead bank scheme (LBS) in 1969.

The committe, led by Reserve Bank Deputy Governor, Usha Thorat, also felt taht private sector banks should also be given greater role in the LBS action plans, particularly in areas of their presence.

Other recommendations included enhancing the business correspondent model, making banking services available in all villages above 2,000 population and relaxation in KYC 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," Thorat told reporters.