Priority Sector Bank Lending-Some Important Issues

Some Important Issues K M Shajahan Priority sector bank lending was an active instrument of our financial policy with an aim to restore sectoral balance within credit disbursement and to channel credit to the weaker sections within these sectors. But banking sector reforms initiated as part of the liberalisation programme, since the beginning of the 1990s, has almost brought the priority sector lending policy to a halt. Moreover, the position of the poorer stares in regard to priority sector bank credit seems to have worsened because of the manner in which priority sector targeting has been done by linking it to total bank credit rather than to bank deposits.