Agricultural Credit in India: A Study of Public and Private Sector Banks

International Journal of Economics and Management Studies

© 2016 by SSRG - IJEMS Journal

Volume 3 Issue 12

Year of Publication : 2016

Authors : Dr. Sanjeev Kumar, Provinder Kumar

10.14445/23939125/IJEMS-V3I6P116

How to Cite?

Dr. Sanjeev Kumar, Provinder Kumar, "Agricultural Credit in India: A Study of Public and Private Sector Banks," SSRG International Journal of Economics and Management Studies, vol. 3,  no. 12, pp. 11-17, 2016. Crossref, https://doi.org/10.14445/23939125/IJEMS-V3I6P116

Abstract:

The banking system touches the lives of millions and has to be inspired by the larger socioeconomic purpose and has to sub-serve the national priorities and objectives. Within the banking institutions, the role of commercial banks has occupied a new meaning and significance, in the view of the changing structure and requirements of a developing economy like India. The growth of agriculture is an important prerequisite, not only for the reasons of food security, but, also in terms of forward and backward linkages that the agriculture sector has with the rest of the sectors of the economy. The main objective of this paper is to analyze the performance of commercial banks in financing agriculture sector in India. The secondary data has been used and collected from the various relevant issues of RBI. The exponential growth rate has been calculated to assess the performance of banks in lending to agriculture sector. The behavior of inter-year as well as inter-bank disparities is explained with the help of co-efficient of variation. The performance banks in agriculture credit has been compared with the help of t-test The study points out that, agriculture credit grew at a lower rate during the second vis-à-vis first phase in both the bank groups. It was also found that, on an average, the prescribed target of agriculture credit was not achieved by banks during the first and second phase. One important issue of concern is the almost stagnant share of agriculture credit in net bank credit over a period of time, which needs immediate attention of the policy makers. The banks also, on an average, failed to achieve the stipulated target of agricultural lending during the first as well as second phase. The study recommends that the banking sector, especially public sector banks, should lead efforts to expand inclusion as private sector initiatives to do so are likely to be curtailed by their objective of maximizing shareholder profit rather than optimizing stakeholder.

Keywords:

 Banking System, Commercial Banks, Developing Economy, Agriculture credit, Secondary Data, Exponential Growth Rate, Coefficient of Variation, t-test, Stagnant.

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