A Critical Study on Priority Sector Lending by Scheduled Commercial Banks in India

Abstract

The present empirical study focuses on the lending of Scheduled Commercial banks towards the priority sector and its different segments. The research is based on secondary data for the period 2005 to 2015. The stress of the article is not just on the total priority sector but different segments in the category. Moreover, analysis is made on the lending performance of different groups of banks. The analysis of data shows that the growth is phenomenal for educational loans, loans to the MSE sector and agriculture apart from that towards the weaker sections. In contrast, the relative growth rate for housing and microcredit is comparatively far lower. A noteworthy aspect is that the state sponsored fund towards SCs and STs show a decline during the period. Moreover, the coefficient of variations shows no major variation around the mean for the different categories of loans. With regard to the groups of banks, it is seen that though the public sector plays a key role, the rate of growth in disbursement through the private sector banks surpasses those of the public sector. The inter-group mean comparison reveals a significant different among all the categories of banks.