Priority Sector Lending : A Comparative Study of Banks

Priority sectors form the foundation and base-structure of an economy. Providing adequatefinancial aid to these important sectors can lead to development of an economy in real terms.These sectors include Agriculture, Micro Small and Medium Enterprises, Housing, Educationand other weaker sections of an economy. Reserve Bank of India, since 1968 have specifiedseparate targets and sub-targets for priority sector lending, falling short of which funds aretransferred to Rural Infrastructure Development Fund (RIDF). The present study aims toanalyse trends and performance patterns of priority sector lending at all India level andPunjab in particular from 2004-05 to 2017-18. Comparative analysis of public and privatebanks has been done in India and Punjab and impact of crisis period on priority sector lendingis also studied sector-wise. Steady CAGRs and increasing growth rates indicate positiveenvironment in banks with respect to lending. But lack of social intent in private banks needto be catered. Priority sector lending has manifold benefits to uplift an economy and thereforethis study analyses the trends and performance, pin-point the problem areas and suggestssome policy implications to improve the lending to priority sectors