The Hindu Business Line : Lead bank scheme

This has the reference to the article “Revitalise the Lead Bank Scheme” (Business Line, August 6) that outlines the changes to be effected in the Scheme to help the banking sector face the challenges of a rapidly transforming scenario. The changes suggested, including elevating the designations of Lead District Managers (LDMs), provision of IT-enabled systems for collection and compilation of reports from individual bank branches and involving corporate ventures in various functional layers of the scheme are of practical significance.

Making poverty alleviation a profitable proposition is to be given due attention by banking authorities. More than the cheaper cost of credit , easy availability of funds must be given priority.

Despite the 40 years of nationalised banking, credit to the weaker sections is still not fully ensured.

Making corporate ventures partners in the decision-making layers of lead banks may not really help. Their role is required but should be limited to the level of observers. Their contribution to the effectiveness of the lead bank scheme may be reflected in the form of corporate social responsibility (CSR), by way of provision of infrastructure from their side for the easy flow of credit.

Their role may also be to subsidise the cost of bank credit by the way of bearing a portion of the interest burden of the weaker section of borrowers.

The Lead Bank Scheme must act as a channelling agency to divert the benefits reaped by corporate ventures, which had themselves used bank credit to grow and benefit.

Revitalisation of the LBS should focus mainly on the re-affirmation and widening the scope of the scheme and rejuvenating its functional arms so that befits flow to the rural and urban poor.

The collection of data and details consume much of the working hours of the banking personnel involved in the scheme’s implementation.

The laborious nature of the implementation of the LBS can be refined by the use of computer technologies.

V. Kumaresan e-mail