Some Empirical Results on Commercial Banks Lending to Priority Sector in India

International Journal of Economics and Management Studies

© 2021 by SSRG - IJEMS Journal

Volume 8 Issue 2

Year of Publication : 2021

Authors : Dr. Sanjeev Kumar

10.14445/23939125/IJEMS-V8I2P102

How to Cite?

Dr. Sanjeev Kumar, "Some Empirical Results on Commercial Banks Lending to Priority Sector in India," SSRG International Journal of Economics and Management Studies, vol. 8,  no. 2, pp. 5-10, 2021. Crossref, https://doi.org/10.14445/23939125/IJEMS-V8I2P102

Abstract:

The role of commercial banks viz. public and private sector banks has a new meaning and significance, in view of the changing structure and requirements of a developing economy. The priority sector lending is and will continue to be a crucial area of concern of public and private sector banks due to the socio-economic realities of the Indian economy. The objective of a research paper is to analyze the growth and structure of priority sector lending by commercial banks in India during the period from 2010 to 2019. The paper is based upon secondary data of 25 public sector banks and 17 private sector bank, collected from the various relevant issues on banking statistics published by RBI. The growth of credit to the priority sector and its various components has been with the help of a compound annual rate of growth. The behavior of inter-year disparities in priority sector lending is explained with co-efficient of variation. The performance of the two bank groups in priority sector lending has been compared with the t-test. The study highlighted that, although, on an average, the prescribed target of priority sector lending has been achieved in many years, one important issue of concern is the shrinking share of priority sector credit in net bank credit over a period of time by both banks group, which required immediate attention of the policymakers. The public and private sector banks could not deploy 18 percent of net bank credit in the agriculture sector and thus failed to achieve the stipulated target of agricultural lending.

Keywords:

Agriculture Credit, Priority Sector Lending, Inter-year disparities, t-test, Net Bank Credit.

References:

[1] Ambiga, D. A. and Gandhimathit, S., Determinants of Agricultural Credit Constraint-A Micro-Level Analysis. Indian Journal of Economics, 360 (XIC) (2010).
[2] EPW Research Foundation. Rural Credit Structure Needs Genuine Revitalization. Economic and Political Weekly, 72(20)(2007) 1802-1808.
[3] Kumar, S. and Gupta, Y., A Comparative Study of Priority Sector Lending in India by Public and Private Sector Banks. The Indian Journal of Economics, 353(LXXXIX) Part II, 193-204 (2008).
[4] Kumar, S. & Kumar, P., Agricultural Credit in India: A Study of Public and Private Sector Banks. SSRG International Journal of Economics and Management Studies, 3(6)(2016) 30-36.
[5] Kumar, S., Priority Sector Advances of Commercial Banks in India: Trends and Strategies. Journal for Studies in Management and Planning, 3(5)(2017) 84-100.
[6] Kumar, S. & Prakash, P., Emerging Trends of NPAs in Priority and Non-Priority Sector in India: A Study of Public and Private Sector Banks. PRAGTI: Journal of Indian Economy, 5(1)(2018) 1-14.
[7] Kumar, S., An Analysis of Priority Sector Lending and Non-performing Assets of Commercial Banks in India. European Journal of Business and Social Sciences, 7(4) (2019) 1189-1198.
[8] Mujumdar, N. A. (1998). Credit Support to Priority Sector- A Macro Perspective. Economic and Political Weekly, 147-150.
[9] Najmi Shabbir., State-wise Priority Sector Lending in India. International Journal of Research in Social Sciences. 9(9)(2019).
[10] Parimalarani, G., Performance of Commercial Banks in Priority Sector Lending. Asia Pacific Journal of Research in Business Management, 2 (7)(2011) 221- 230.
[11] Paritba Naruka and Dr. Manju Yadav., Priority Sector Lending: Genesis, development, and trade-off with bank’s profitability. International Journal of Advanced Research and Development, 2(3)(2017) 21-25.
[12] 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 3.12 (2016): 11-17.
[13] Sabnai, P., Retail Financing- The Engine for Growth in Lending. Vinimaya, NIBM Publication, 2(25)(2004).
[14] Satish, P., Agricultural Credit in the Post-Reform Era-A Target of Systematic Policy Correction. Economic and Political Weekly, (2007) 2567-2575.
[15] Shajahan, K.M., Priority Sector Bank Lending- Some Important Issues. Economic and Political Weekly, 42 & 43 (22)(1998) 2749-2756.
[16] Shajahan, K.M.., Priority Sector Lending- How Useful, Economic and Political Weekly, (1999) 3572-74,
[17] Shete, N.B. (2002-03). Priority Sector advances of Banks during the Post-Reform Period. Prajnan, 1(31), 21-37.
[18] Shilpa Rani and Diksha Garg (2015). Trend, Issues, and Stratiges. International Journal of Management and Social Science Research, 4(1).
[19] Sooden, M. and Kumar, S., Priority Sector Lending in the Post Reform Period. Finance, Indian Institute of Finance, 4(21)(2007) 1389-1404.
[20] Uppal, R.K.., Priority sector advances: Trends, issues, and strategies. Journal of Accounting and Taxation,1(5) (2009) 79-89.
[21] Veerakumar, K., Non-Performing Assets in Priority Sector: A Threat to Indian Scheduled Commercial Banks. International Research Journal of Finance and Economics, 93, 6-23.
[22] Statistical Tables Relating to Banks in India. RBI Publication, Mumbai.
[23] Report on Trend and Progress of Banking in India. RBI Publication, Mumbai.