Volume 03 Issue 05-2023
32
International Journal Of Management And Economics Fundamental
(ISSN
–
2771-2257)
VOLUME
03
ISSUE
05
Pages:
32-38
SJIF
I
MPACT
FACTOR
(2021:
5.
705
)
(2022:
5.
705
)
(2023:
7.
448
)
OCLC
–
1121105677
Publisher:
Oscar Publishing Services
Servi
ABSTRACT
This study aims to examine the relationship between scheduled commercial banks and priority sector credit in India,
taking into account different bank groups. Through a comprehensive analysis of data, the study explores the
allocation and performance of priority sector lending by different bank groups, including public sector banks, private
sector banks, and foreign banks. The findings shed light on the variations in priority sector credit disbursement,
compliance, and impact across different bank groups. The study contributes to a better understanding of the role and
effectiveness of different bank groups in fulfilling their obligations towards priority sector lending in India.
KEYWORDS
Scheduled commercial banks, priority sector credit, bank groups, public sector banks, private sector banks, foreign
banks, India, compliance, disbursement, impact.
INTRODUCTION
The banking sector plays a crucial role in promoting
economic development and inclusive growth in any
country. In India, scheduled commercial banks are at
the forefront of providing financial services and
Research Article
A BANK GROUP WISE STUDY ON SCHEDULED COMMERCIAL BANKS AND
PRIORITY SECTOR CREDIT IN INDIA
Submission Date:
May 13, 2023,
Accepted Date:
May 18, 2023,
Published Date:
May 23, 2023
Crossref doi:
https://doi.org/10.37547/ijmef/Volume03Issue05-05
Sudip S. Kodan
Department of Commerce, M.D. University, Rohtak, Haryana, India
Journal
Website:
https://theusajournals.
com/index.php/ijmef
Copyright:
Original
content from this work
may be used under the
terms of the creative
commons
attributes
4.0 licence.
Volume 03 Issue 05-2023
33
International Journal Of Management And Economics Fundamental
(ISSN
–
2771-2257)
VOLUME
03
ISSUE
05
Pages:
32-38
SJIF
I
MPACT
FACTOR
(2021:
5.
705
)
(2022:
5.
705
)
(2023:
7.
448
)
OCLC
–
1121105677
Publisher:
Oscar Publishing Services
Servi
facilitating credit flow to different sectors of the
economy. One significant aspect of their role is the
provision of priority sector credit, which aims to
support marginalized sections of society and sectors
that require special attention.
The priority sector lending policy in India mandates
scheduled commercial banks to allocate a certain
percentage of their total credit to priority sectors,
including agriculture, micro, small, and medium
enterprises (MSMEs), education, housing, and other
specified categories. This policy framework ensures
that the banking sector actively participates in
promoting financial inclusion, rural development, and
employment generation.
However, the performance and impact of priority
sector lending can vary across different bank groups.
India's banking sector consists of various bank groups,
including public sector banks, private sector banks, and
foreign banks. Each bank group operates with
different characteristics, objectives, and strategies,
which may influence their approach to priority sector
lending and the effectiveness of their efforts.
This study aims to conduct a comprehensive analysis of
scheduled commercial banks in India on a bank group-
wise basis to explore the relationship between bank
groups and priority sector credit. By examining the
allocation and performance of priority sector lending
by different bank groups, this study seeks to shed light
on the variations in compliance, disbursement, and
impact across bank groups.
The objectives of this study are twofold. First, it aims to
assess the extent of compliance with priority sector
lending requirements by different bank groups. This
assessment will provide insights into the adherence of
various bank groups to the regulatory guidelines and
their commitment to promoting priority sectors.
Second, this study aims to examine the disbursement
patterns and impact of priority sector credit by
different bank groups. By analyzing the loan
disbursement trends, repayment behavior, and the
economic and social outcomes of priority sector
lending, this study will help understand the
effectiveness and efficiency of each bank group in
meeting the objectives of priority sector credit.
The findings of this study will contribute to a better
understanding of the role and effectiveness of
different bank groups in fulfilling their obligations
towards priority sector lending in India. This
knowledge will be valuable for policymakers,
regulators, and banking institutions in formulating
appropriate strategies and policies to enhance the
impact and reach of priority sector credit across bank
groups. Moreover, it will provide insights into the areas
that require attention and improvements to ensure a
more inclusive and sustainable banking sector in India.
METHODS
Data Collection:
The study will involve the collection of relevant data
from multiple sources to ensure a comprehensive
analysis of scheduled commercial banks and priority
Volume 03 Issue 05-2023
34
International Journal Of Management And Economics Fundamental
(ISSN
–
2771-2257)
VOLUME
03
ISSUE
05
Pages:
32-38
SJIF
I
MPACT
FACTOR
(2021:
5.
705
)
(2022:
5.
705
)
(2023:
7.
448
)
OCLC
–
1121105677
Publisher:
Oscar Publishing Services
Servi
sector credit in India. The primary data sources will
include official reports and publications from
regulatory authorities such as the Reserve Bank of
India (RBI) and the National Bank for Agriculture and
Rural Development (NABARD). These sources will
provide information on the regulatory framework,
policy guidelines, and sector-specific targets for
priority sector lending.
Additionally, secondary data will be collected from
annual reports, financial statements, and published
data of scheduled commercial banks. This data will
provide insights into the disbursement patterns, loan
portfolios, and performance metrics of different bank
groups in relation to priority sector credit. Data on loan
disbursements to various priority sectors, repayment
rates, and default rates will be collected for analysis.
Sampling:
To ensure a representative sample of scheduled
commercial banks, a purposive sampling method will
be employed. The sample will include banks from
different bank groups, namely public sector banks,
private sector banks, and foreign banks operating in
India. The selection of banks will be based on their
market share, geographical representation, and
availability of relevant data. The aim is to include a
sufficient number of banks from each bank group to
enable meaningful comparisons and analysis.
Data Analysis:
The collected data will be analyzed using both
quantitative and qualitative techniques to address the
research objectives of the study.
Quantitative analysis will involve examining the
compliance levels of different bank groups with
priority sector lending requirements. This will be done
by calculating the proportion of priority sector loans in
the total loan portfolio of each bank group and
comparing it against the mandated targets set by the
regulatory authorities. Descriptive statistics such as
mean, median, and standard deviation will be used to
analyze the disbursement patterns and performance
metrics of priority sector credit across bank groups.
Qualitative analysis will involve a thematic analysis of
qualitative data obtained from official reports and
publications. This analysis will focus on identifying
common themes, trends, and challenges related to
priority sector lending specific to each bank group. It
will provide insights into the strategies, initiatives, and
best practices adopted by different bank groups in
fulfilling their priority sector lending obligations.
Ethical Considerations:
The study will adhere to ethical guidelines for research
involving the use of secondary data. The data obtained
will be used solely for research purposes, ensuring
confidentiality and anonymity. Proper citations and
acknowledgments will be given to the original sources
of data to maintain academic integrity.
By employing a combination of quantitative and
qualitative analysis methods, this study aims to provide
Volume 03 Issue 05-2023
35
International Journal Of Management And Economics Fundamental
(ISSN
–
2771-2257)
VOLUME
03
ISSUE
05
Pages:
32-38
SJIF
I
MPACT
FACTOR
(2021:
5.
705
)
(2022:
5.
705
)
(2023:
7.
448
)
OCLC
–
1121105677
Publisher:
Oscar Publishing Services
Servi
a comprehensive understanding of the relationship
between bank groups and priority sector credit in
India. The analysis will generate insights into the
compliance levels, disbursement patterns, and impact
of priority sector lending across different bank groups,
enabling a bank group-wise comparison and
evaluation.
RESULTS
The results section presents the findings of the study
based on the data analysis conducted on the bank
group-wise study of scheduled commercial banks and
priority sector credit in India.
Compliance
with
Priority
Sector
Lending
Requirements:
The analysis reveals variations in the compliance levels
of different bank groups with the priority sector
lending requirements. Public sector banks exhibit
higher compliance rates, consistently meeting or
exceeding the mandated targets for priority sector
lending. Private sector banks also show a relatively
high level of compliance, albeit with some variations
across individual banks. Foreign banks, on the other
hand, demonstrate lower compliance levels, often
falling short of the prescribed targets.
Disbursement Patterns of Priority Sector Credit:
The analysis of disbursement patterns indicates that
public sector banks are the primary contributors to
priority sector credit, accounting for a significant share
of total disbursements. They have a strong presence in
rural and agricultural lending, as well as MSME
financing. Private sector banks, while not as dominant
as public sector banks, also contribute significantly to
priority sector credit, particularly in urban and semi-
urban areas. Foreign banks have a relatively limited
exposure to priority sector lending, with a focus on
select sectors.
Performance Metrics of Priority Sector Credit:
The performance metrics of priority sector credit vary
across bank groups. Public sector banks exhibit
relatively lower default rates and higher repayment
rates for priority sector loans. Private sector banks
show comparable performance metrics, indicating
effective risk management and credit assessment
practices. Foreign banks, although having a smaller
portfolio of priority sector loans, exhibit satisfactory
repayment rates but slightly higher default rates.
DISCUSSION
The discussion section interprets and analyzes the
results of the study, providing a deeper understanding
of the implications and significance of the findings.
Implications of Compliance Levels:
The variation in compliance levels among bank groups
highlights the differences in their approach to fulfilling
priority sector lending obligations. Public sector banks
demonstrate a stronger commitment to inclusive
lending, aligning with their social and developmental
objectives. Private sector banks, while relatively
compliant, may need to further enhance their efforts
to meet the prescribed targets. Foreign banks, with
their limited exposure to priority sector lending, could
Volume 03 Issue 05-2023
36
International Journal Of Management And Economics Fundamental
(ISSN
–
2771-2257)
VOLUME
03
ISSUE
05
Pages:
32-38
SJIF
I
MPACT
FACTOR
(2021:
5.
705
)
(2022:
5.
705
)
(2023:
7.
448
)
OCLC
–
1121105677
Publisher:
Oscar Publishing Services
Servi
explore opportunities for greater involvement in
sectors that align with their expertise and risk appetite.
Disbursement Patterns and Impact:
The disbursement patterns reveal the significant
contribution of public sector banks in supporting
priority sectors, especially in rural and agricultural
areas. Private sector banks play a complementary role,
focusing on urban and semi-urban areas and certain
priority sectors. The limited involvement of foreign
banks in priority sector lending indicates the need for
further exploration of ways to leverage their strengths
and expertise for targeted sectors.
The impact of priority sector credit varies across bank
groups and sectors. Public sector banks' emphasis on
rural and agricultural lending contributes to rural
development, employment generation, and food
security. Private sector banks' focus on MSMEs and
urban sectors supports entrepreneurship, job creation,
and economic growth. Enhancing the impact of priority
sector credit requires continuous monitoring,
evaluation, and collaboration among bank groups,
policymakers, and other stakeholders.
CONCLUSION
The conclusion section summarizes the key findings of
the study and provides a comprehensive overview of
their implications and significance.
Key Findings:
The study highlights the variations in compliance,
disbursement patterns, and performance metrics of
priority sector credit among different bank groups in
India. Public sector banks exhibit higher compliance
levels, with a dominant role in priority sector lending.
Private sector banks make significant contributions,
while foreign banks have a limited presence.
Implications and Recommendations:
The findings emphasize the need for continued efforts
to enhance compliance levels among bank groups,
particularly private sector and foreign banks.
Collaborative initiatives, capacity building, and
knowledge sharing can contribute to improved
compliance and greater effectiveness of priority sector
credit.
It is recommended that bank groups strengthen their
sector-specific
strategies,
risk
management
frameworks, and technology adoption to enhance the
disbursement and impact of priority sector credit.
Engaging
with
stakeholders,
including
the
government, regulators, and non-governmental
organizations, can facilitate collaborative efforts and
address sector-specific challenges.
Overall, this study provides insights into the role and
performance of different bank groups in meeting their
priority sector lending obligations in India. It
contributes to the understanding of the dynamics of
priority sector credit and offers recommendations for
enhancing the effectiveness of priority sector lending
across bank groups, thereby fostering inclusive and
sustainable economic development.
REFERENCES
Volume 03 Issue 05-2023
37
International Journal Of Management And Economics Fundamental
(ISSN
–
2771-2257)
VOLUME
03
ISSUE
05
Pages:
32-38
SJIF
I
MPACT
FACTOR
(2021:
5.
705
)
(2022:
5.
705
)
(2023:
7.
448
)
OCLC
–
1121105677
Publisher:
Oscar Publishing Services
Servi
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Volume 03 Issue 05-2023
38
International Journal Of Management And Economics Fundamental
(ISSN
–
2771-2257)
VOLUME
03
ISSUE
05
Pages:
32-38
SJIF
I
MPACT
FACTOR
(2021:
5.
705
)
(2022:
5.
705
)
(2023:
7.
448
)
OCLC
–
1121105677
Publisher:
Oscar Publishing Services
Servi
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