Background

In October 1968, a study group (headed by late Dr. R. Gadgil) on 'Organizational framework for implementation of social objectives' was set up by the National Credit Council.

The group recommended adoption of "area approach" for evolving plans and programmes for the development of banking and credit structure in October 1969. The group suggested that district should be the unit in area approach.

Soon after nationalization of major commercial banks in 1969, a committee of banks headed by Sri F.K.F. Nariman, the then custodian of Union Bank of India, was appointed by Reserve Bank of India to evolve a coordinated programme for ensuring the spread of adequate banking facilities in the country. The committee had a view that for assisting the process of the balanced regional development each bank should concentrate on certain districts.

Based on the recommendations of Gadgil study group and of the Nariman Committee, Reserve Bank of India finalized Lead Bank Scheme giving concrete shape to area development approach and Commercial Banks were assigned with the lead bank responsibilities in particular districts to act as pace setters in providing integral banking facilities under Lead Bank Scheme in 1969.

The main aim of the lead bank scheme is to provide collective action by banks and other financial institutions in the implementation of bankable schemes for improvement in the district economy. For ensuring effective and collective action coordination becomes a vital function to be performed by lead banks. It was in this context that Reserve Bank of India advised the lead banks to create an appropriate forum by setting up District Level Consultative Committees (DLCCs) in their lead districts.

The vast expansion of banking network and the major shift in their orientation towards new role assigned to banks through Lead Bank Scheme brought into sharp focus the need for adequate machinery for enquiring coordination at different levels of the organization. The study group on the working of lead bank schemes in Gujarat and Maharashtra in their report recommended that the State Level Committees be set up (where they do not exist) or be activated to ensure coordination and periodical review of lead bank scheme at state level. These state level committees, known as State level Consultative committees were expected to make significant contribution in resolving problems which could not be settled at DCC meetings being beyond the powers of District level functionaries. The Department of Revenue and Banking, Government of India, at the close of 1976 desired immediate organization of State Level Bankers' Committee in all the states to create adequate coordination machinery at State level on uniform basis. Convenership of SLBC was assigned to Lead Bank of the State.

The guidelines on functioning of these SLBCs are given here below:

Status of the Committee

The State Level Bankers' Committee (SLBC) has been envisaged as a consultative and coordination body of all financial institutions operating in each state. The Committee is expected to discuss issues, consider alternative solutions to the various problems in the field of banking development and evolve a consensus for co-ordinate action by the member institutions. All the member institutions are, therefore, expected to approach the committee's tasks in spirit of cooperation and intimate involvement without which the committee is likely to lose its utility and become a mere debating forum.

Organizational Structure

The State Level Bankers' Committee comprise of the representatives of all the commercial banks and the Chairmen of Regional Rural Banks operating in the state. Representatives of State Cooperative Bank, Land Development Bank, Reserve Bank of India and NABARD are also to be invariably invited to attend the meeting of the committees. The concerned State Govt. officials also participate in the meetings of this forum by invitation.

Banks having sizeable scale of operations in the relative state are expected to be represented at the level of Zonal / Regional Managers so that expeditious decision making becomes possible. The Regional Rural Banks would be represented by the Chairmen. Banks having less than 5 branches in a state could, however, be represented by Manager of the Branch of the Bank located at state headquarters.

It is possible that in many states the membership of the State Level Bankers' Committee may be too large to permit effective deliberation, maintenance of liaison and decision-making. In such a situation, the Committee may constitute a 'Steering Sub-Committee' comprising representative of State Co-operative Bank and the Land Development Bank to discuss problems and evolve a course of action for adoption by the full committee. The representatives of the Commercial Banks on the steering sub-committee may not be below the rank of Regional/Zonal Managers. The Regional Rural Banks because of their special nature of responsibility be given adequate representation in these 'Steering Sub-committees' also.

If the State Level Bankers' Committee or the steering sub-committee desires to have any specific problem to be studied in depth and course of action outlined, there is no objection to their entrusting the tasks to Study groups comprising of representatives of 3 to 4 banks more intimately concerned with the problem or having greater expertise at their command.

Banks, specifically designated as conveners of the State Level Bankers' Committee in various states, may not delegate this responsibility to any other bank. There is however, no objection to the representatives of different banks being made the Chairmen of the Steering Committees or study groups for the requisite secretarial assistance to the State Level Bankers' Committees. This would involve issue of notices, preparation of agenda papers, keeping and circulating record of discussions and decisions and following up action points arising out of them. It is expected that each convener bank would provide small cells to service these committees at the offices of the Zonal / Regional Managers in charge of the State in which it has assumed the convenership responsibility.

Periodicity of SLBC Meetings

Each State Level Bankers' Committee may meet as often as necessary keeping in view the business on hand. It is, however, expected that the frequency of such meetings will in no case be less than once every quarter. The Steering sub-committee' is expected to meet more often than the main committee. It would, however, be useful if the State Level Bankers' Committee do meet and discuss issues before every meeting of the State Level Coordination Committees, so as to facilitate the banks to take a constructive and coordinated view of the problems proposed to be discussed by the State Level Bankers' Committee.

Attendance at the meetings

It is expected that the nominated representatives of the Bank will attend all the meetings of the main committee, the Steering Sub-committee or any study group. If for any unavoidable reason a nominated representative of bank can not be present at any particular meeting, he should nominate his next-in command to attend the meeting on his behalf, after duly briefing him about the Bank's views on the various items of the agenda for the meeting. The objective should be that issues for considerations do not get postponed for want of attendance of the representatives of the banks.

Proceedings and Follow-up Actions

The proceedings of the meetings of the committee or its sub-committees may be drawn up by the Convener Bank and circulated to all the members within a fortnight of the date of the meetings.

Each bank is expected to initiate follow-up action on the consensus arrived at the meetings of the committee. Every endeavor should be made to implement all the recommendations of committee.

In any case, the decision not to implement any of the recommendations of the committee be taken only after reference to examination of the question at the head office of the Bank.

The Convener Bank may present to the committee an assessment report on the following-up action taken by the bank on decisions of the committee. Cases of non-acceptance of noncompliance with the recommendations of the committee may be specifically listed in such reports.

Scope of Activities

All the State Level Bankers' Committees are expected to take up for consideration such issues as have been raised by the member banks or by the State Government authorities and questions or inter bank difference of views and approach remaining unresolved at the district level consultative committee. While all the State Level Bankers' Committee are expected to address themselves to the problems particular to the concerned State, some of the problems which are expected to be concerned to all the states and which many of the State Level Bankers' Committees have already taken up or decided to take up for consideration are briefly enumerated below :
 

• Regional imbalances in availability of banking facilities
• Regional imbalances in deployment of credit
• Area demarcation for effective coverage
• Liaison with State Government
• Review of the functioning of District Consultative Committees
• District Credit Plans
• Regional Consultative Committees
• Uniformity in terms and conditions of lending
• Review of Credit Flows

Responsibility of SLBC Convenership in Maharashtra

The responsibility of SLBC Convenership in Maharashtra is with Bank of Maharashtra.