A Comparative Study of Commercial
Banks Lending to Priority Sector in India (2013-2022)
Dr. Provinder Kumar1, Dr.
Dinesh Kumar2
1.Assistant Professor, Department of
Commerce, RNT Govt. College Sarkaghat, District Mandi, HP- 175024.
2.Assistant Professor, Department of
Commerce, NSCBM Govt. College Hamirpur, District Hamirpur, HP- 177001.
*Corresponding
Author E-mail: provinder11@gmail.com, dr.dinesh110@gmail.com
ABSTRACT:
Within the banking system, the role
of public and private sector banks has taken on a new significance in light of
changing economic conditions in India. The priority sector, in which includes
areas such as agriculture, small scale industries, and other priority sector.
The priority sector yet to be and will continue to be an important area of
focus for all banks over the next decade due to tough socio-economic realities
faced by Indian banks. The objective of this research paper is to analyze
lending levels and structure within the priority sector over the past ten
years. The entire study of this paper is based upon secondary data, collected
from the various relevant issues published by RBI and from other reliable
sources of 12 public sector banks and 21 private sector banks. The entire study
is stretched over the period 2013 to 2022, with a view to analyze the growth of
various components of priority sector lending with the help of compound annual
rate of growth. The behavior of inter-year disparities in priority sector
lending is explained with the help of percentage, co-efficient of variation and
the performance of these two banks group in priority sector lending has been
computed with the help of t-test. The study highlighted that, although, on
an average, the prescribed target of priority sector lending has not been
achieved in many years, but, one important issue of concern is that 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 policy
makers. The public and private sector banks could not deploy 18.00 per cent of
net bank credit in agriculture sector and thus, they are failed to achieve the
stipulated target of agricultural lending.
KEY WORDS:
Agriculture
Credit, Financial Inclusion, Priority Sector Lending, inter-year disparities
Secondary Data, Compound Annual Rate of growth, Percentage of Co-efficient of
Variation, t-test, Net Bank Credit (NBC), ‘Other Priority Sector’, Indian
economy.
INTRODUCTION:
Banking
system is a crucial component of the service sector and acts as a backbone of
economic development[1]. The banks are provide various types of important
services to the masses belonging to the various sectors of the economy like services
industries, agriculture sector and industry whether they are small scale or
large scale [2]. The banking system is one among the institutions
that bump on the economy and impact its performance for better or worse. The
banking system, act as a development mediator and a source of hope and
inspiration of the masses [3]. A developing economy faces various
types of problems, like poverty, scarcity of capital, unemployment, lack of
good entrepreneurship etc [4]. The public and private sector banks
can work as a motivator agents of growth by making the right kind of policies
in their working, depending upon the socio-economic conditions exist in the
country [5]. These banks have adequate investment potential and can
make an important contribution in eradicating the poverty, unemployment and in
bringing about progressive reduction in inter-regional, inter society and
inter-sect oral disparities through rapid growth of banking services [6].
Public sector
banks are those banks in which the maximum shares/equity are held by
government. Firstly public sector banks emerged with the nationalization of
Imperial Bank of India (1921) and it become State Bank of India (1955) as a
part of integrated scheme of rural credit introduced by the All India Rural
Credit Survey Committee (1951). This bank was unique in various respects and it
enjoys a position of permanency as the agent of RBI, wherever RBI has no
branches. In the present time SBI is the
single largest bank of the country with huge international presence, with a
network of 48 overseas offices spread over 28 countries covering in whole
world. The Indian banking system is
composition of two major sectors of banks i.e. public and private sector banks.
The firstly is controlled by the government and the secondly controlled by
private shareholders. Therefore private sector banks are those
banks in which majority of shares/equity are held by private share holders [7].
Priority sector
occupied a significance place in the Indian economy and is a special feature of
the Indian banking system. Priority sector lending is the essence of social
banking system. Under the priority sector lending, banks are provided the
credit on liberal terms and conditions to various sectors. The socialization of
bank credit is the main theme of priority sector lending by these bank groups [8].
Priority sector lending is and will also continue to remain, its importance by both
ways, literally and figuratively, of Indian economic development. Since the priority
sector is also a critical to high and sustained growth of GDP, so it should be
the responsibility of public and private sector banks to support these sectors [9].
In 1980, a major review of the various components of priority sector lending was
analyses by a working group chaired by K.S. Krishnaswamy. The group
recommendation on the incorporation of weaker sections under the priority
sector, so that, the benefit that are being offered to the priority sector as a
class could be oriented to meet the needs of the weaker sections also. The some
credit was earmarked to the weaker sections of the society i.e. small and
marginal farmer, small businessmen, self-help groups landless labourers, SC/ST
etc. for achieve this object banks opened more and more branches in rural areas
where has no banking facilities yet [10].
REVIEW OF LITERATURE:
A number of research studies
have been conducted in India on various aspects of priority sector lending by
the public and private sector banks. For example, Sooden and Kumar [11]
found that shrinking share of priority sector, neglect of agriculture
coupled with its sub-optimum structure and neglect of small scale industries
are some main problems which need immediate attention for the policy makers.
Kumar and Gupta [12] observed
that agricultural lending by the public sector banks has somewhat stagnated. The
percentage share of small scale industries in priority sector lending registered
a continuous decline and the percentage share of ‘other priority sector’ in the
priority sector lending registered a continuous increase during the period
under context. Uppal [13] found
that in his study that, public sector banks have failed to achieve the target
of 40 per cent, private sector banks have succeeded in achieving the overall
target. Shabbir [14] found that majority of public and private
sector banks are fulfilled their target of overall priority sector lending but
not be able to fulfill the sub target of 18 per cent in agriculture sector. H.N.
Harakantra, Dr. Sharda, Dr. N.S. Magadur [15] overview the priority
sector lending of commercial banks in North Kanara Distt. Found that priority
sector advances and agriculture advances of both types of banks has improved
manifold over the study period. Shilpa Rani and diksha Garg[16]
examined the trends, issues, and strategies of priority sector lending. They
pointed out the various issues in priority sector lending as low profitability,
higher NPAs, govt. interferences, tractions cost and vesting decision of
discretionary power to bank mergers. Kumar Provinder& Sanjeev [17]
found in their study that private sector banks have achieved their targets of
in maximum years comparative to public sector banks. Pratibha Naruka and Dr.
Manju Yadav [18] found in their study that priority sector lending
has tremendous significance in term of upgrading the indicator of inclusive growth
to the society. Dr. Najmi Shabbir [19] found in his study that
priority sector lending in different years among different states of the
country was not uniform.
RESEARCH
METHODOLOGY:
The main objective
of the study is to analyze the level and structure of priority sector lending
in India during last ten years. The entire study of this research paper is
based upon secondary data and all the required information is collected from
the various relevant issues published by the Reserve Bank of India and from
other reliable sources of 12 public
sector banks and 21 private sector banks.
Further, the period of study is divided in to two parts i.e. Phase I
which includes the years 2013 to 2017 and Phase II stretching over the years
2018 to 2022.
With a view to
analyze the growth of priority sector lending, compounded annual rate of growth
has been calculated as follows:
CARG = (1+r) n-1
Where, n=number of
year, carg= compounded annual rate of growth, r= rate of growth
The structure of
priority sector lending is analyzed by Mean Value of an indicator which, is
calculated for first and second phase separately.
The combined mean (X) =
Xi =
i=1
Where, ni
stand for number of observations for study and X i stands for Mean Value.
The behavior of
inter-sector disparities in priority sector lending is examined with the help
of percentage of co-efficient of
variation (C.V.).
The value of C.V.
is calculated as follows:
C.V. =
×100 Where, C.V. stands for co-efficient of
variation,
σi = Standard
deviation of ith indicator,
i = Mean value of ith indicator.
The performance of
public and private sector banks under priority sector lending will be analyses
with the help of t-test during the both phase of the study.
The value of
t-test will be calculated as follow:
t =
Where, n1 and n2 =
size of two independent samples i.e. no. of years for study
X1 and
X2 is the Mean Value i.e. Mean Value of priority sector lending by both
bank groups.
S=average standard
deviation of two samples. The null hypothesis is tested at 5% level of
significance.
1.
Priority Sector Lending by Public and Private Sector Banks:
Table
1: Credit Deployed to Priority Sector by Two Banks Group (Amount
in Crores)
Year
|
Public Sector Banks
|
Private Sector Banks
|
|
NBC
|
Total PSAs
|
% to NBC
|
NBC
|
Total PSAs
|
% to NBC
|
Phase-I
|
2013
|
3530808
|
1283680
|
36.36
|
872270
|
327406
|
37.53
|
2014
|
4048175
|
1618971
|
39.99
|
1062553
|
466650
|
43.92
|
2015
|
4584974
|
1750893
|
38.19
|
1228405
|
530287
|
43.17
|
2016
|
4886633
|
1985307
|
40.63
|
1495298
|
662030
|
44.27
|
2017
|
5329716
|
2043474
|
38.34
|
1809536
|
758713
|
41.93
|
Average
|
4476061
|
1736465
|
38.70
|
1293612
|
549017
|
42.16
|
CAGR in %
|
0.11
|
0.12
|
|
0.20
|
0.23
|
|
CV in %
|
|
|
4.33
|
|
|
6.50
|
Phase-II
|
2018
|
5350290
|
2199201
|
41.10
|
2144819
|
871306
|
40.62
|
2019
|
5458341
|
2286394
|
41.89
|
2832260
|
1245178
|
43.96
|
2020
|
5794783
|
2360275
|
40.73
|
3255048
|
1369396
|
42.07
|
2021
|
6124314
|
2532708
|
41.35
|
3688522
|
1599199
|
43.36
|
2022
|
6370164
|
2755763
|
43.26
|
4064587
|
1811818
|
44.58
|
Average
|
5819578
|
2426868
|
41.67
|
3197047
|
1379379
|
42.92
|
CAGR in %
|
0.04
|
0.06
|
|
0.17
|
0.20
|
|
CV in %
|
|
|
2.37
|
|
|
3.69
|
Source:-
Complied on the Basis of Relevant Issues of ‘Report on Trend and Progress of
Banking in India’ and ‘Statistical tables Relating to Banks in India’,
Published by RBI.
The
priority sector credit by public sector banks, on an average, increased at a
compounded annual rate of growth 0.12 per cent during the first phase and this
rate declined to 0.06 per cent during the second phase of the study [Table 1].
The public sector banks, on an average, deployed 38.70 per cent of NBC in
priority sector during the first phase. It was observed that only in the year
2016 of the first phase of study the prescribed target of priority sector
lending was achieved by public sector banks (i.e. 40.00 per cent). The analysis
revealed further that the prescribed target of priority sector lending was
achieved by public sector banks during the second phase of study and on an
average, 41.67 per cent of NBC was deployed in priority sector by public sector
banks. It is further analysis from study that, the value of co-efficient of
variation in the first and second phases
was 4.33 and 2.37 respectively.
Further,
the priority sector credit by the private sector banks, on an average,
increased at a rate of 0.23 per cent during the first phase and this rate
decreased by a small margin to 0.20 per cent during the second phase of the
study [Table 1]. The private sector banks, on an average, deployed 42.16 per
cent of NBC in priority sector during the first phase and 42.92 per cent during
the second phase. The analysis revealed that in the all years (Except 2013) of
the first phase of study the prescribed target of priority sector lending was
achieved (i.e. 40.00 per cent) by the private sector banks. During the second
phase of the study, the prescribed target of priority sector lending was
achieved in all years by private sector banks. So it is observed that in both
phases of study, the prescribed target priority sector lending was achieved by
private sector banks (Except 2013). It is further analysis from study that, the
value of co-efficient of variation in private sector banks was 6.50 and 3.69
during the first and second phases respectively.
2. Sector-wise Deployment of Priority Sector
Lending by Public Sector Banks:
Agriculture
credit, on an average, recorded a compounded annual rate of growth of 0.16 per
cent during the first phase and it declined to 0.06 per cent in the second
phase [Table 2]. So the study, due to new policy guidelines issued in 1991
under the umbrella of financial sector reforms. Under the new policy guidelines of 1991, the public sector banks
in default in meeting the priority sector sub-target of 18.00 per cent of net
bank credit to agriculture would compensate the deficiency by contributing to
Rural Infrastructure Development Fund (RIDF) and to the consortium fund of
Khadi and Village industries Commission (KVC). In this way the banks could move
away from their responsibility of direct lending to priority sectors especially
the risky venture like agriculture.
As per the Reserve
Bank of India norms, public sector banks are required to lend 18.00 per cent of
net bank credit to agriculture sector since the year 1990 onwards. The public
sector banks, on an average, deployed 16.74 per cent of net bank credit in
agriculture sector and failed to achieve the stipulated target of 18.00 per
cent of NBC during the first phase (Except 2016). Further, an analysis that, in the second
phase only in the years 2021 and 2022 (18.38 and 18.99 per cent) the prescribed
target of agricultural lending was achieved by public sector banks but in
another two years (2018 & 2019) it was near its prescribed target. The
public sector banks, on an average, deployed 18.01 per cent of NBC in
agriculture sector during the second phase of study.
Table
2: Sect oral Deployment of Priority Sector Credit by Public Sector Banks (Amount
in Crores)
Years
|
Agriculture
|
SSIs
|
Other Priority Sector
|
Credit
|
%age to TPSAs
|
%age to NBC
|
Credit
|
%age to TPSAs
|
%age to NBC
|
Credit
|
%age to TPSAs
|
%age to NBC
|
Phase-I
|
2013
|
530677
|
41.34
|
15.03
|
478444
|
37.27
|
13.55
|
274559
|
21.39
|
7.78
|
2014
|
643287
|
39.73
|
15.89
|
587424
|
36.28
|
14.51
|
388260
|
23.98
|
9.59
|
2015
|
756233
|
43.19
|
16.49
|
650434
|
37.15
|
14.19
|
344226
|
19.66
|
7.51
|
2016
|
904772
|
45.57
|
18.52
|
734055
|
36.97
|
15.02
|
346480
|
17.45
|
7.09
|
2017
|
946851
|
46.34
|
17.77
|
741958
|
36.31
|
13.92
|
362568
|
17.74
|
6.80
|
Avg.
|
756364
|
43.23
|
16.74
|
638463
|
36.80
|
14.24
|
343219
|
20.04
|
7.75
|
CAGR in %
|
0.16
|
|
|
0.12
|
|
|
0.07
|
|
|
C.V. in %
|
|
6.44
|
8.42
|
|
1.28
|
3.94
|
|
13.55
|
14.11
|
Phase-II
|
2018
|
961076
|
43.70
|
17.96
|
863307
|
39.26
|
16.14
|
374818
|
17.04
|
7.01
|
2019
|
975354
|
42.66
|
17.87
|
905685
|
39.61
|
16.59
|
405355
|
17.73
|
7.43
|
2020
|
975766
|
41.34
|
16.84
|
928119
|
39.32
|
16.02
|
456390
|
19.34
|
7.88
|
2021
|
1125566
|
44.44
|
18.38
|
991686
|
39.16
|
16.19
|
415456
|
16.40
|
6.78
|
2022
|
1209788
|
43.90
|
18.99
|
1043993
|
37.88
|
16.39
|
501982
|
18.22
|
7.88
|
Avg.
|
1049510
|
43.21
|
18.01
|
946558
|
39.05
|
16.27
|
430800
|
17.75
|
7.40
|
CAGR in %
|
0.06
|
|
|
0.05
|
|
|
0.08
|
|
|
C.V. in %
|
|
2.84
|
4.38
|
|
1.72
|
1.38
|
|
6.35
|
6.75
|
Source: - As per
Table 1
An analysis of the
public sector banks, the compound annual rate of growth of credit to SSIs
revealed that it, on an average, increased at a rate of 0.12 per cent during
the first phase, but, it declined to 0.05 per cent during the second phase.
However, the public sector banks, on an average, deployed 14.24 per cent of net
bank credit to SSIs during the first phase. This share rose marginally increase
to 16.27 per cent during the second phase, in the absence of any clear
guidelines by RBI (as it is there in case of agriculture). It was due to that the public sector banks have gradually
increased the quantity of advances to small scale industries, but, the share,
in which net bank credit in priority sector has expanded, the relative share of
small sector has not grown in the same ratio during the period of study.
The public sector
banks ‘other priority sector’ credit, on an average, increased at a rate of 0.07
per cent during the first phase [Table 2]. However, this rate marginally
increased and stood at 0.08 per cent per annum during the second phase of the
study. The public sector banks, on an average, deployed 7.75 per cent and 7.40
per cent of net bank credit in ‘other priority sector’ during the first and
second of the study respectively. It is
further analysis from study that, the value of co-efficient of variation in
private sector banks was 14.11 and 6.75 during the first and second phases
respectively.
2.1
Sector-Wise Deployment of Priority Sector Lending by Private Sector Banks:
Table
3: Sect oral Deployment of Priority Sector Credit by Private Sector Banks (Amount
in Crores)
Years
|
Agriculture
|
SSIs
|
Other Priority Sector
|
Credit
|
%age to TPSAs
|
%age to NBC
|
Credit
|
%age to TPSAs
|
%age to NBC
|
Credit
|
%age to TPSAs
|
%age to NBC
|
Phase-I
|
2013
|
111968
|
34.20
|
12.84
|
141735
|
43.29
|
16.25
|
73703
|
22.51
|
8.45
|
2014
|
147754
|
31.66
|
13.91
|
186793
|
40.03
|
17.58
|
132103
|
28.31
|
12.43
|
2015
|
181768
|
34.28
|
14.8
|
216578
|
40.84
|
17.63
|
131941
|
24.88
|
10.74
|
2016
|
266857
|
40.31
|
17.85
|
292342
|
44.16
|
19.55
|
102831
|
15.53
|
6.88
|
2017
|
297244
|
39.18
|
16.43
|
355702
|
46.88
|
19.66
|
105767
|
13.94
|
5.84
|
Avg.
|
201118
|
35.93
|
15.17
|
238630
|
43.04
|
18.13
|
109269
|
21.03
|
8.87
|
CAGR in %
|
0.28
|
|
|
0.26
|
|
|
0.09
|
|
|
C.V. in %
|
|
10.20
|
13.15
|
|
6.36
|
8.01
|
|
29.17
|
30.61
|
Phase-II
|
2018
|
368988
|
42.35
|
17.20
|
392440
|
45.04
|
18.30
|
109878
|
12.61
|
5.12
|
2019
|
491870
|
39.5
|
17.37
|
594400
|
47.74
|
20.99
|
158908
|
12.76
|
5.61
|
2020
|
574566
|
41.96
|
17.65
|
669161
|
48.87
|
20.56
|
125669
|
9.18
|
3.86
|
2021
|
612628
|
38.31
|
16.61
|
834280
|
52.17
|
22.62
|
152291
|
9.52
|
4.13
|
2022
|
686621
|
37.90
|
16.89
|
1007691
|
55.62
|
24.79
|
117506
|
6.49
|
2.89
|
Avg.
|
546935
|
40.00
|
17.14
|
699594
|
49.89
|
21.45
|
132850
|
10.11
|
4.32
|
CAGR in %
|
0.17
|
|
|
0.27
|
|
|
0.02
|
|
|
C.V. in %
|
|
5.14
|
2.37
|
|
8.22
|
11.29
|
|
25.98
|
24.81
|
|
|
|
|
|
|
|
|
|
|
|
Source: - As per
Table 1.
Agriculture credit
of private sector banks, on an average, recorded a rate of growth of 0.28 per
cent during the first phase and this rate decreased with a very small margin to
0.17 per cent in the second phase. The private sector banks as per the Reserve Bank
of India norms are also required to lend 18.00 per cent of net bank credit to
agriculture sector. These banks, on an average, deployed 15.17 per cent of net
bank credit in agriculture sector and thus these private sector banks failed to
achieve the stipulated target of priority sector lending in the first phase and
also during the second phase, in none of the years, the prescribed target
lending was achieved by private sector banks (i.e. 40.00 per cent) and on an
average, deployed 17.14 per cent of net bank credit in agriculture sector.
Further an
analysis of rate of growth of credit to SSIs revealed that it, on an average,
recorded a rate of growth of 0.26 per cent during the first phase, but it increase
to a rate of 0.27 per cent during the second phase [Table 3]. The private
sector banks, on an average, deployed 18.13 per cent of net bank credit to SSIs
during the first phase. However, these shares increase to 21.45 per cent during
the second phase of the study.
An analysis of
private sector banks, rate of growth of credit to ‘other priority sector’
revealed that, it on an average, stood as 0.09 per cent in the first phase. However,
this rate declined to 0.02 per cent per during the second phase of the study.
The percentage share of ‘other priority sector’ credit to net bank credit, on
an average, stood at 8.87 and 4.32 per cent of during the first and second
phase respectively.
3.
RESULTS AND DISCUSSION:
3.1
Test of Hypothesis of Mean Value of Credit Deployed to Priority Sector by Two
Bank
Groups:
Table
4: t-test of Credit Deployed to Priority Sector by Two Bank Groups
Phase-I
|
Mean
Value
|
Std. Dev.
|
t-test
|
d. f. (v)
|
Sig.
(2-Tailed Test)
|
Public Sector Banks
|
144705.40
|
25522.46
|
11.17
|
8
|
9.070
|
Private Sector Banks
|
26143.68
|
8003.36
|
|
|
|
Phase-II
|
Mean
Value
|
Std. Dev.
|
t-test
|
d. f. (v)
|
Sig.
(2-Tailed Test)
|
Public Sector Banks
|
202239.00
|
18417.13
|
12.17
|
8
|
1.922
|
Private Sector Banks
|
65684.73
|
17029.59
|
|
|
|
|
|
|
|
Note:
n1=5
and n2=5 (Number of Years).
Degree of freedom, d. f. (v) = n1+n2-2=5+5-2=8.
The value of t-test for two tailed
test for v=8 is (t0.05) =2.17.
The null
hypothesis shows that there is no significant difference in the mean value of
credit deployed by two bank groups (H0:
μ1=μ2). Whereas, the alternative hypothesis shows that
there is significant difference in the mean value of credit deployed by two
bank groups (H1: μ1≠μ2).
Since, the calculated value of t-test during the first phase and second phase
are 11.17 and 12.17 respectively [Table 4], which are more than the table value (for v =8, t0.05 =2.17) and
are found significant at 5% level (Significance, two tailed test= 9.070 and
1.922), so the null hypothesis is rejected and alternative hypothesis is
accepted, and we conclude that there is significant difference in the mean
value of credit deployed by public and private sector bank groups (H1: μ1≠μ2)
during the first and second phase of the study.
3.2
Test of Hypothesis of Mean Value of Credit Deployed to Various Components of Priority Sector by Two Bank Groups:
The null
hypothesis shows that there is no significant difference in the mean value of
credit deployed to agriculture sector by two bank groups (H0: μ1=μ2). Whereas, the
alternative hypothesis shows that there is significant difference in the mean
value of credit deployed by two bank groups (H1: μ1≠μ2). Since, the calculated
value of t-test during the first and second phase are 9.22 and 12.83
respectively [Table 5], which are more than the table value (for v =8, t0.05 =2.17) and are found significant at 5%
level (Significance, two tailed test=4.557 and 1.576), so the null hypothesis
is rejected and alternative hypothesis is accepted, and we conclude that there
is significant difference in the mean value of credit deployed to agriculture
sector by both bank groups (H1:
μ1≠μ2) during the both the phases of the study.
In case of SSIs,
the computed value of t-test during the first phase is 8.85 which is greater
than the table value (for v =8, t0.05
=2.17) and it is found in-significant at 5% level (Significance, two tailed
test=1.403), so the null hypothesis is rejected and alternative hypothesis is
accepted, and we conclude that there is also significant difference in the mean
value of credit deployed to Small Scale Industries by public and private sector
bank groups (H1: μ=μ2)
during the first phase. However, during the second phase, the calculated value
of t-test is 8.41, which is also more than the table value (for v =8, t0.05 =2.17) and it is also found
significant at 5% level (Significance, two tailed test=4.149), so the null
hypothesis is rejected and alternative hypothesis is accepted, and we conclude
that there is significant difference in the mean value of credit deployed to
Small Scale Industries by public and private sector bank groups (H1: μ1≠μ2)
during both phases of the study.
Further, in case
of “Other Priority Sector” the calculated value of t-test during the first and
second phase are 15.81 and 18.17 respectively [Table 5], which are more than
the table value (for v =8, t0.05
=2.17) and are found significant at 5% level (Significance, two tailed
test=6.119 and 2.841), so the null hypothesis is rejected and alternative
hypothesis is accepted, and we conclude that there is significant difference in
the mean value of credit deployed to ‘Other Priority Sector’ by public and
private sector bank groups (H1:
μ1≠μ2) during the first and second phase.
Table
5: T-test of Credit Deployed to Agriculture, SSIs, and ‘Other Priority Sector’
by Two Bank Groups
Agriculture
Credit
|
Phase-I
|
Mean
Value
|
Std. Dev.
|
T-test
|
d. f. (v)
|
Sig.(2-Tailed
Test)
|
Public Sector Banks
|
63,030.33
|
14,555.41
|
9.22
|
8
|
4.557
|
Private Sector Banks
|
9,577.06
|
3,744.36
|
Phase-II
|
Mean
Value
|
Std. Dev.
|
T-test
|
d. f. (v)
|
Sig.(2-Tailed
Test)
|
Public Sector Banks
|
87,459.17
|
9,338.49
|
12.83
|
8
|
1.576
|
Private Sector Banks
|
26,044.50
|
5,797.44
|
Small
Scale Industries (SSIs) Credit
|
Phase-I
|
Mean
Value
|
Std. Dev.
|
T-test
|
d. f. (v)
|
Sig.(2-Tailed
Test)
|
Public Sector Banks
|
53205.25
|
9,148.03
|
8.85
|
8
|
1.403
|
Private Sector Banks
|
11,363.33
|
4,065.29
|
Phase-II
|
Mean
Value
|
Std. Dev.
|
T-test
|
d. f. (v)
|
Sig.(2-Tailed
Test)
|
Public Sector Banks
|
78,879.83
|
5,961.60
|
8.41
|
8
|
4.149
|
Private Sector Banks
|
33,314.02
|
11,152.41
|
‘Other Priority
Sector’ Credit
|
Phase-I
|
Mean
Value
|
Std. Dev.
|
T-test
|
d. f. (v)
|
Sig.(2-Tailed
Test)
|
Public Sector Banks
|
28601.55
|
3,518.04
|
15.81
|
8
|
6.119
|
Private Sector Banks
|
5203.29
|
1,155.21
|
Phase-II
|
Mean
Value
|
Std. Dev.
|
T-test
|
d. f. (v)
|
Sig.(2-Tailed
Test)
|
Public Sector Banks
|
35,900.02
|
4,111.85
|
18.17
|
8
|
2.841
|
Private Sector Banks
|
6326.21
|
1,030.07
|
Note: As per Table 1
Note: n1=5
and n2=65(Number of Years).
Degree of freedom,
d. f. (v) = n1+n2-2=5+5-2=8.
The value of t-test
for two tailed test for v=8 is (t0.05) =2.17.
4.
CONCLUSION AND SUGGESTIONS:
The
study points out that, the priority sector lending by private sector banks
registered a higher compounded rate of growth vis-à-vis public sector banks,
during both the phases of the study. From the overall analysis of the study, it
was found that, on an average, the prescribed target of priority sector lending
was not achieved by public as well as private sector banks during the first and
second phase (in many years). Although, the prescribed target of priority
sector lending has been achieved by these bank groups in few years, but one
important issue of concern is that, the shrinking share of priority sector credit
in net bank credit over a period of study by both the public and private sector
banks, which needs immediate attention of the policy makers. The inter-year
disparities in priority sector lending in case of private sector banks are
found to be higher as compared to public sector banks in both the phases. The
public and private sector banks, on an average, could not deploy 18.00 per cent
of net bank credit in agriculture sector and thus, failed to achieve the
stipulated target of agricultural lending during the both phases. It was found
that, within the priority sector, the share of agriculture and SSIs credit has
increased marginally, while the share of ‘other priority sector’ by both the
bank groups has decreased during the period under study. In this context the
following suggestions have been taken for the future improvements in the sphere
of the priority sector lending.
Ø Every
bank should train their employees in the art of lending to priority sector and
should be continue encouraged to upgrade their skill in the area of lending.
Ø The RBI
should convert the present system of target- oriented lending to the priority
sector and bank should be given total freedom to lend to all deserving and
productive enterprises according to their own norms of lending without any
interferences.
Ø Farmer
of our country requires a lot of counselling. So, bank officer engaged in this
field should be trained in this art of providing advice and counsel when they
needed and consider the requests of the borrowers with a humane touch.
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