From Obligation to Opportunity: Evaluating Priority Sector Lending Dynamics in a Post-COVID Economy
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Abstract
Priority sectors form the foundation and base-structure of an economy. Providing adequate financial aid to these sectors leads to real economic development. These sectors include Agriculture, MSMEs, Housing, Education, and other weaker sections. The Reserve Bank of India (RBI) has specified targets for priority sector lending (PSL) since 1968. Falling short of these targets results in fund transfers to the Rural Infrastructure Development Fund (RIDF). This study analyses the trends and performance of PSL at the all-India level and in Punjab from 2008-09 to 2021-22, with a focus on the COVID-19 crisis (2020-21). Comparative analysis of public and private banks reveals varied performance and sectoral disparities. While steady CAGRs indicate positive lending trends, the lack of social commitment in private banks remains a concern. Recommendations focus on policy reforms and crisis resilience.