India 's Project Lending Policy Essay

827 Words Aug 19th, 2015 4 Pages
Priority sector lending has become the most important and unavoidable aspect of India’s directed credit lending policy for the sectors that lack institutional financial support. Against this background, this paper tries to examine the changing definition and pattern of priority sector lending with respect to agricultural sector and to analyze the trends and growth performance of commercial banks in the area of agricultural finance from the priority sector lending (PSL) perspective. This paper is broadly divided into two parts as the first part reviews the government’s effort towards the PSL by the SCBs in India and the second part analyzes the growth in the branches of SCBs from the priority sector lending (PSL) perspective.
Ahluwalia, M.S. (2006) has clarified that the fear of abandonment of the directed lending were completely unwarranted and that is why the recommendation of the Narasimhan Committee (RBI, 1991) to sharply reduce the priority sector lending has not been accepted and the same has been decided to be continued on the grounds that at the present stage of our development, a sudden shift from a system long characterized by directed credit requirements, to a pure market based allocation may disrupt the flow to agriculture. Dasgupta (2002) has overviewed the targets and definitions of priority sector lending before and after 1991, i e, pre- and post-reform periods and found a very different approach towards priority sector in the two…

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