Bansagar Control Board was set up vide Government of India, Ministry of Agriculture and Irrigation Resolution No. 8/17/74-DW-II dated the 30th January, 1976. It was amended vide Resolution No 18/17/74-DW-II dated the 28th March 1990. This Resolution was in accordance with an agreement reached between the Governments of Madhya Pradesh, Uttar Pradesh and Bihar on the 16th September 1973 for sharing the waters of River Sone and the cost of the Bansagar Dam. After amendment the main features of the resolution are as below: -

"In consultation with the Governments of Madhya Pradesh, Bihar and Uttar Pradesh, it has been decided to set up the Bansagar Control Board with a view to ensuring the efficient, economical and early execution of Bansagar dam including all connected works in Madhya Pradesh, but excluding the canal systems which will be executed by respective States namely, Madhya Pradesh, Uttar Pradesh and Bihar. The Control Board will be in overall charge of the project including its technical and financial aspects. The actual work of construction will be carried out under the direction of the Control Board by the Chief Engineer concerned of the Madhya Pradesh Government."

"The Three State Governments agree to delegate powers to the Chief Engineer, Madhya Pradesh, to contract for works, supplies and services under the direction of the Control Board. The contract in respect of all works will, however, be executed in the name of the Governor of Madhya Pradesh."

The main features of the agreement reached by the three States are as follows: -

• Madhya Pradesh will use 2.0 M.A.F. of water from storage of Bansagar Dam in addition to utilizing 1.0 M.A.F. in the upstream and 2.25 M.A.F. downstream of Bansagar Dam for irrigation in the areas of Sone basin in their State. The allocation of Madhya Pradesh is thus 5.25 M.A.F.
• Madhya Pradesh can develop power at the foot of Bansagar Dam and in the lower reaches of Sone in their territory in addition to development of power at Chachai falls utilizing waters diverted for irrigation.
• Uttar Pradesh will use 1.25 M.A.F. of water from river Sone which includes 0.25 M.A.F. from river Kanhar and 1.0 M.A.F. from the storage of Bansagar Dam as well as by lifting water from river Sone.
• Bihar was allocated 7.75 M.A.F. water from river Sone out of which 1.0 M.A.F. will be from the storage of Bansagar Dam.
• The cost of Bansagar Dam including cost of rehabilitation will be shared in the proportion of water utilized by Madhya Pradesh, Uttar Pradesh and Bihar i.e. 2:1:1 respectively.
• The three States agreed to authorize Government of India to set up Special River Commission for study of Sone River and make its studies available in 5 to 10 years for further planning of irrigation and other benefits to the region by mutual agreement.

The project has been named as "Bansagar" after Bana Bhatt, the renowned Sanskrit Scholar of 7th century A.D. who is believed to have hailed from this region of the country.

The river Sone has its source at Amarkantak in Shahdol District in Madhya Pradesh at an elevation of 1067.0 m. For about 509 km, the river runs through Madhya Pradesh in the districts of Shahdol and Sidhi and then for a length of about 96 km, it flows through Uttar Pradesh. Thereafter it enters Bihar where it meets the Ganga on its right bank near Bankipur town, 820.74 km from its source.

The total catchment area of the Sone river is 69,284 sq.km of which 47,848 sq.km or about 68.9% lies in Madhya Pradesh and the rest in U.P. and Bihar. The catchment area up to the dam site is 18,648 sq. km. The rainfall in the upper part of the catchment area is fairly high and the river has sizeable water resources. The quantity of water available, however, has so far not been utilized for irrigation except for the irrigation developed in Bihar under the Sone canal systems and development of power at Rihand Dam in Uttar Pradesh.

River Sone has immense potential for development of irrigation and power to benefit the famine and scarcity hit areas in addition to providing much needed power for exploiting the industrial potential of the area which is rich in minerals. The project will cater for the irrigation needs of large parts of chronic scarcity affected areas in Shahdol, Sidhi, Satna and Rewa districts of M.P., Mirzapur district of U.P. and Palamau district of Bihar

This project will provide annual irrigation to 2.49 lakh hectares in Madhya Pradesh, 1.5 lakh hectares in Uttar Pradesh < 0.94 lakh hectares in Bihar towards stabilizing its existing Sone canal system.