PRIORITY SECTOR ADVANCES :- TRENDS , ISSUES AND STRATEGY A CASE STUDY ON KUMAUN REGION

Financial institution : Banking

The priority sector lending is mainly projected to ensure that the support from the banking system to those sectors of the economy which has not received sufficient support of institutional finance. The attainment of the socio economic priority of the government like enlargement of agriculture, promotion of small entrepreneurs and development of diffident area etc is the major liability of commercial banks. Since seventies, Reserve Bank of India and government of India have predetermined guidelines for priority sector lending by banks. The same was revised on April 30, 2007 and overall priority sector lending target was fixed at 40 per cent for domestic banks and 32 per cent for foreign banks. However, the banks are not able to reach the prescribed target of lending to priority sector. The small entrepreneurs and farmers are continued to be both credit and demand constraints. Thus, it can be observed that the demand for funds for priority sector viz., small entrepreneurs and agricultural sector is enormous. With this backdrop, the present treatise is an attempt to diagnose the various lacunas of priority sector lending by commercial banks in the area under consideration in the context of national scenario.

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