Journal Press India^®

Author Details ( * ) denotes Corresponding author

Priority sector lending is still and will continue to be an important focus and area of concern of all the commercial banks in the near future because of hard socio-economic realities of the Indian economy. The main objective of the paper is to analyse the level and structure of priority sector lending in India during the 21^st century. The entire study is based upon secondary data, collected from the various relevant issues published by RBI. The study is stretched over the period 2001 to 2014. With a view to analyse the growth of various components of priority sector lending, exponential growth rate has been calculated. The behaviour of inter-year disparities in priority sector lending is explained with the help of co-efficient of variation. The performance of public and private sector banks in priority sector lending has been compared with t-test. The study points out that, although, on an average, the prescribed target of priority sector lending has been achieved, but, one important issue of concern is the shrinking share of priority sector credit in net bank credit over a period of time by both the public and private sector banks, which needs immediate attention of the policy makers. The public and private sector banks could not deploy 18 per cent of net bank credit in agriculture sector and thus, failed to achieve the stipulated target of agricultural lending. ​

Keywords

Financial inclusion; Priority sector lending; Commercial banks; Exponential growth rate; Co-efficient of variation; Net Bank Credit (NBC)

1. Agarwal, O.P. (2008). Modern Banking of India. Himalaya Publishing House: New Delhi.
2. Desai, V. (2009). The Indian Financial System and Development. Himalaya Publishing House: New Delhi.
3. Gupta, S.P. (2000). Statistical Methods. Sultan Chand and Sons: New Delhi.
4. Kumar, S. & Gupta, Y. (2008). A comparative study of priority sector lending in India by public and private sector banks. The Indian Journal of Economics, 89 (353-II):193-204.
5. Mujumdar, N. A. (1998). Credit support to priority sector- A macro perspective. Economic and Political Weekly, 24:147-150.
6. Mukherjee D. D. (2014). Credit Appraisal, Risk Analysis & Decision Making – An Integrated Approach to on and off Balance Sheet Lending. Snow White Publications Pvt. Ltd.: Mumbai.
7. Parimalarani, G. (2011). Performance of commercial banks in priority sector lending. Asia Pacific Journal of Research in Business Management, 2 (7): 221- 230.
8. Ravichandran, K. (2008). Merchant Banking and Financial Services. Himalaya Publishing House: New Delhi.
9. Satish, P. (2007). Agricultural Credit in the Post-Reform Era-A Target of Systematic Policy Correction. Economic and Political Weekly, 30:2567-2575.
10. Shabbir, N. (2013). Region-wise priority sector advances in India. Journal of Social Science for Policy Implications, 1 (2).
11. Shajahan, K.M. (1998). Priority sector bank lending- Some important issues. Economic and Political Weekly, 22(42 &43): 2749-2756.
12. Shete, N.B. (2002-03). Priority Sector advances of banks during the post-reform period. Prajnan, 31(1):21-37.
13. Sooden, M. & Kumar, S. (2007). Priority Sector Lending in the Post Reform Period. Finance India, 21(4):1389-1404.
14. Uppal, R.K. (2009). Priority sector advances: Trends, issues and strategies. Journal of Accounting and Taxation, 1(5): 079-089.
15. Veerakumar, K. (2012). Non-performing assets in priority sector: A threat to Indian Scheduled commercial banks. International Research Journal of Finance and Economics, 93: 6-23.
16. Vijayaragavan, G. (2009). Bank Credit Management. Himalaya Publishing House: New Delhi.