Priority Sector Lending in India by Public and Private Sector Banks: A Comparative Analysis

Abstract

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 21st 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.