In the October of 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.
The Guidelines on functioning of SLBCs are given here below:
The State Level Bankers' Committee (SLBC) has been envisages as a consultative and co-ordination 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 co-operation and intimate involvement without which the committee is likely to lose its utility and become a mere debating forum.