Poor presence of private banks in LBS: RBI panel

A high level committee of the Reserve Bank of India (RBI) has expressed dissatisfaction over the “poor” participation of private banks for promoting banking services and financial literacy as such activities are being undertaken largely by public sector banks.

“There is a general feeling that the Lead Bank Scheme (LBS) covers only the public sector banks ... Attendance by private sector banks in the various fora under the LBS is poor,” the committee said in a draft report to review the LBS that was put up for public comments.

The report said that the private sector banks despite availing resources, do not participate in the government schemes that benefit the lowest strata of society. “The major allocations for agriculture and non-farm rural sector as also under government sponsored schemes are predominantly to these (public sector) banks,” the report added. Lead banks are lenders assigned by RBI in a specified area to promote banking services and financial literacy. These banks will have strong presence in the respective regions.

The committee, led by RBI Deputy Governor Usha Thorat, also felt that the scheme should be continued to accelerate financial inclusion in the country. “The SLBC (state level bankers’ committee) and the various fora under LBS should focus on addressing the ‘enablers’ and ‘impeders’ in achieving greater financial inclusion and flow of credit to priority sectors,” the report said.