Priority sector credit and the Lead Bank Scheme: the financial inclusion role of the Reserve Bank

Background

Financial inclusion and development is one of the stated roles of the Reserve Bank of India. Under it the central bank frames policy so that credit flows to the fields it calls priority sectors, and treats priority sector lending as a way for banks to reach business among people left outside the formal system. The Reserve Bank also sets out a National Strategy for Financial Inclusion and a National Strategy for Financial Education, which lay down the aims for the whole financial sector. The first of those two can be accessed in 19 other languages, Malayalam among them. Credit for micro, small and medium enterprises, for self help groups, for borrowers of the SC/ST category and for minority communities is handled under this role. So is credit for agriculture and allied activities, together with relief for borrowers in areas hit by a natural calamity. The institutional arrangement is the Lead Bank Scheme, which works through State Level Bankers’ Committees, District Consultative Committees, District Level Review Committees and Block Level Bankers’ Committees.