The lead banking scheme (LBS), introduced in 1969, should be continued to accelerate financial inclusion in the unbanked areas of the country, a high-level RBI committee has proposed. Lead banks are those lenders, assigned by the RBI in specified areas to promote banking services and financial literacy. These banks will have strong presence in the respective regions.

The committee, led by Reserve Bank deputy governor Usha Thorat, also felt that private sector banks should be given a greater role in LBS action plans, particularly in areas of their presence.

Other recommendations included enhancing 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,” Thorat told reporters.