RBI criticises PSBs for poor implementation of 'Lead Bank' scheme - The Smart Investor

RBI criticises PSBs for poor implementation of 'Lead Bank' scheme - The Smart Investor: Market News from one of the most comprehensive financial news networks in India, it provides daily insight of the stock market, industry news, business news, economy news, loans...



My response:

June 4, 2018
Revamping Lead Bank Scheme*

This refers to the report “RBI criticizes PSBs on Lead Bank Scheme” by Namrata Acharya (Business Standard, June 4). Though the major portion of the responsibility in implementing Lead bank Scheme falls on the shoulders of public sector banks (PSBs) as these banks have over 70 percent market share in banking business, interpreting RBI’s circular dated April 6, 2018 on revamp of Lead Bank Scheme (LBS), as a criticism of PSBs alone, exposes the media bias against public sector.
Historically, nationalization of banks in India and introduction of LBS were initiatives aimed at financial inclusion ensuring wholehearted participation of all stakeholders. At no stage, LBS was conceived as an exclusive responsibility of PSBs, as the implementation of the scheme needed policy support from GOI, RBI and state governments, and involvement of all banks and several government and non-government organizations.
Just as still the banking system is struggling with the incompatibility of the size and dimensions of currency notes issued by RBI, the absence of uniform procedure and speed in collection and compilation of ground level data in respect of credit needs and credit off-take has been a major impediment in fixing targets and their monitoring under the LBS. Post-computerization, diverse software used by different banks/agencies pose a real problem in collection and use of data. Unless these issues are addressed, periodic revamps and reviews will remain raw material for preparing background notes for future ‘Review Committees’, with not much improvement at the ground level.



M G Warrier, Thiruvananthapuram 
*Published in Business Standard on June 5, 2018

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