12

CHAPTER – 2

REVIEW OF LITERATURE

2.1 Introduction 13

2.2 Previous Research Work 13

2.3 Research Papers 17

2.4 Articles, Studies and Reports 25

2.5 Books 28

13

2.1 Introduction

A literature review is a survey and discussion of the literature in a given

area of study. It is a concise overview of what has been studied, argued, and

established about a topic, and it is usually organized chronologically or

thematically. A Literature Review is more than an Annotated Bibliography or a

summary, because you are organizing and presenting your sources in terms of

their overall relationship to your own project. A literature review is written to

highlight specific arguments and ideas in a field of study.

With regards to this research study, the researcher has referred various books,

articles, newspapers and previous research work related to this area. A few of

them is narrated below :

2.2 Previous Research Work

M. I. Dave (1984)1, ―The Study of Causes of Industrial Sickness in Small

Scale Sector with special reference to Saurashtra Region‖. The purpose of the

study was to examine magnitude and causes of industrial sickness in Small

Scale Industries. The researcher has studied 20 units of Saurashtra Region. He

suggested that as lack of adequate financial assistance was one of the major

causes of industrial sickness of Small Scale Industries, the government should

undertake measures to provide the same to SSIs.

N. M. Munshi (1986)2, ―Personnel Management in the Units of Small Scale

Industries of Saurashtra Region‖. The researcher has studied 150 Small Scale

Industries from Rajkot, Jamnagar & Bhavnagar cities of Saurashtra Region.

The study concluded that finance is very important problem area for units of

Small Scale Industries. They are mainly facing the problem in the areas of i)

requirement of capital investment or block of capital. ii) problem arising from

the working capital.

14

Vijaykumar K Bhatasana (1998)3, ―Appraisal of Financial Performance of

State Bank of India‖. The study was for 15 year from 1980-1995 to analyze

profit and profitability, employee productivity, branch productivity etc. It also

deals with appraisal of financial performance with respect to Priority Sector

Lending.

A thesis (2002)4, by P. Vimala, on ―A Study on Priority Sector Lending by

Commercial Banks in Kerala‖, (http://www.mgutheses.in/page/?q=

T%201543& search=&page=&rad=#) described about genesis and concept of

priority sector lending, socio banking profile of Kerala state. The study was

based on both secondary as well primary data. The growth of deposits,

advances and priority sector advances of all scheduled commercial banks in

Kerala have been studied since nationalization of banks in 1969. The study

analysed District Credit Plans sector wise viz. Agriculture, SSI and Tertiary

Sector from 1991-92 to 2000-01 i.e. for ten years. On the basis of the primary

data collected, it analysed the socio banking profile of borrowers, reasons for

availing bank loans, services offered by the banks and hardships in obtaining

loans. The study also included comparative analysis of Priority Sector

Advances among State Bank Group, Nationalised Banks and Other Scheduled

Commercial Banks.

Jagdish K. Patel (2002)5, ―Dimensions of Growth and Effectiveness of

Banking Services‖. It is an Analytical Study of Selected Urban Cooperative

Banks in North Gujarat. 12 cooperative banks of North Gujarat were selected

to analyze effectiveness of customer services, investment in banks, evaluation

of deposits, profit, loan policies etc. The study analyzed that loans are not

repaid on time as majority of loans are given without analyzing customers

soundness.

Prof. Rajeshvari Nathwani (2004)6, ―The Study of Customers‘ Preferences

and Managerial Effectiveness of Nationalized and Private Sector Banks‖. The

purpose of the study was to evaluate product information readiness for banks,

rates and loan processes in banks, to observe physical office environment, to

evaluate managerial effectiveness etc.

15

Nirmal Nathwani (2004)7, ―The Study of Financial Performance of Banking

Sector of India‖. The study covered all 100 banks i.e. Public Sector Banks,

Private Sector Banks and Foreign Banks working in industry to evaluate

operational efficiency, profitability, credit efficiency etc. It also compared

productivity aspect of all banks.

Bhanderi Mira (2007)8, ―Empirical Study of CAMEL Approach in selected

Private Sector Banks‖. The study was undertaken to evaluate financial

performance of private sector banks and to judge applicability of CAMEL

Model. For this purpose, 7 old private sector banks were taken as sample. The

period of study was 1998-99 to 2004-05. The study reveals that though there is

phenomenal development in various banking sector yet the private sector is

lagging behind specifically in major thrust area such as asset quality, business

per employee, capital adequacy requirements etc.

Deepak M. Sharma (2007)9, ―Critical Evaluation of Indian Banking Sector

(with special reference to Private Sector Banks and Public Sector Banks)‖. The

study examines various financial as well as operational parameters like

financial performance, overall productivity & profitability, employee

productivity, branch profitability, branch productivity, level of accomplishment

of social responsibility & obligations etc.

In a thesis (2008)10

, by Ashish P Vora, on ―Impact Of Selected Banking

System On Small Scale Industries With Special Reference To Gujarat‖, the

researcher studied Bank-wise , District wise and Region wise allocation of

credit plan for Small Scale Industries(SSIs) as well as Bank-wise, District wise

and Region wise achievement of credit of selected nationalized banks for SSIs

in Gujarat state. Data of nationalised banks for ten years i.e. from 1997 to

2006 were analysed for study purpose. It mainly studied two sectors viz.

Agriculture and SSIs. It also discussed about inter banking issues on

evaluation and grant of credit to SSIs.

16

Jadeja Archna M. (2010)11

, ―An Empirical Evidence for Relationship of Bank

Profitability and CRR, Trends among selected Banks‖. The period of the study

is 5 years i.e.2004-05 to 2008-09. The study concluded that capital base of

most Indian banks is relatively low. Most banks will need to raise a large

amount of funds to meet the regulatory capital allocation for risks in future,

credit growth and upgrading technology systems. Further it concludes that

public sector banks are lower in financial performance as compared to private

sector banks.

Thesis (2010) 12

, by M. Prasada Rao, on ―Impact Of Self Help Group –Bank

Linkage Programme And Its Role On The Upliftment Of The Poor‖ (Special

Reference To Raigad District, Maharashtra State). The study based on

secondary data as well as primary data collected from field survey mainly from

a)Self Help Groups(SHGs) of Visakhapatnam, Raigad, & Thane, b)Individuals

and c)Banks and Chairman of SHGs. The study concluded that microfinance

can contribute to solving the problem of inadequate housing and urban services

as an integral part of poverty alleviation programmes. It suggested to provide

multi-purpose loans or composite credit for income generation, housing

improvement and consumption support. Microfinance institutions should

contribute more to this by building financial discipline and educating

borrowers about repayment requirements.

Devangini Pandya (2011)13

, ―Evaluation of Financial Indicators of Old and

New Private Sector Banks‖. The researcher has suggested that the extension of

services to rural parts will enhance the customer base and volume of

transactions of banks. It will facilitate the bank to reap the benefits of large

scale operations.

Manisha K Vagh (2011)14

, ―Review of Functional Aspect of Selected Banks

with Reference to Priority Sector Lending‖. The period of the study is 10 years

i.e. from 2001-2010. As sample, the study considered State Bank of India &

Associates, Public Sector Banks and Private Sector Banks of India. The study

gives comparative analysis between Public Sector Banks v/s Private Sector

Banks.

17

A thesis (2013)15

by Dr. R. (Reintje) Maasdam and Prof. Dr. B.W. (Robert)

Lensink, on ―Microfinance, Indian subprime and new regulation‖. The study

was mainly about The regulatory response to the 2010 microfinance crisis in

Andhra Pradesh, India. In response to the crisis, the Reserve Bank of India

(RBI) installed the Malegam committee. The results of the Malegam report

triggered new regulation for NBFC-Micro Finance Institutions (MFIs). This

paper set out to investigate whether the regulatory response to the 2010

microfinance crisis in Andhra Pradesh was adequate and whether it will help

the sector to develop in a sustainable matter. The study concluded that the

regulatory response was fairly adequate in the sense that it addressed the six

likely causes of the microfinance crisis: credit boom to MFIs, lack of

regulation, differing state agenda, usury interest rates, pre-existing SHG

framework and coercive recovery methods. Moreover, it also recommended the

introduction of more extensive regulation for the microfinance sector and also

the centralized supervision over the sector.

2.3 Research Papers

The Draft Technical Paper(2005)16

on ―Review of Priority Sector Lending‖,

prepared by the Internal Working Group, Rural Planning and Credit

Department, RBI, September 2005. The working group was set up under the

chairmanship of Shri C. S. Murthy, Chief General Manager-in-Charge. The

paper described about Genesis and evolution of Priority Sector in India. It also

discussed international experiences as regards to direct lending. The paper

analysed the trends in priority sector lending by scheduled commercial banks in

India viz. Advances to Agriculture, Small Scale Industries, Industria Estate,

Road and Water Transport Operators. The paper suggested proposed

classification of priority sector advances.

18

R. K. Uppal (2009)17

, ―Priority sector advances: Trends, issues and strategies‖.

This study is based on the parameters like lending to priority sector by public,

private sector and foreign bank groups, targets achieved by public, private

sector and foreign bank group, Non-performing assets (NPAs), while lending

to priority sector. All the parameters have been analyzed for the period, 2006 –

2007. The study concluded that public sector banks have not achieved the

target of 40% while private sector banks have achieved the overall target. Any

private sector bank could not achieve the 10% target by lending to weaker

section. On the other hand, foreign banks have achieved the small scale

industries‘ export credit and overall target. NPAs of public sector banks have

increased because of high priority sector advances. The paper discussed the

problems or issues which arise due to priority sector advances and also

suggested some strategies to sought out these issues. It suggested that the

concerns for achieving quantitative targets within stipulated time frame

irrespective of assessed demand or potential have caused an erosion of the

qualitative aspects of lending which have an effect on the viability of the

lending institutions. Bank should fix quantitative as well as qualitative targets

so that viability of the banks can increase.

P.Raman & Dr. N.Thangavel (2011)18

, ―Social Banking In India: Priority

Sector Lending And Its Developments -A Study‖. A research study was

conducted for India to know about the preference of Indian commercial banks

viz. Public Sector Banks (as a whole) and Private Sector Banks (as a whole) in

the area of Social Banking in particular reference to Priority Sector Credit. The

study period covered over the period of 5 years and in some cases 10 years

starting from 2001 to 2010. The data analysis based on secondary data

collected from different published journals, reports and magazines. The study

analysed the effects of the credit system by commercial banks in the priority

segments viz, Agriculture, Small Business, Rural and Weaker sector

development. This paper analyzed the various constructs of social banking in

India. It also analyzed some of the financial facts of social banking. It

concluded that Priority sector lending is a notable initiative of the government

of India to strengthen the social banking concept. Branch banking into

unbanked areas and priority sector lending to target sectors have succeeded in

19

the reduction of poverty in India. The extension of banks to rural areas is due to

increase in agricultural and non agricultural output.

Dr Jasmindeep Kaur & Silony (2011)19

, ―Performance Review Of

Commercial Banks In India With Special Reference To Priority Sector Lending

- A Study Of Post Reforms Era‖. The paper is related to the role of public

sector and private sector banks in priority sector lending. The period for the

study is from 1990-91 to 2007-08. The study analysed (percentage analysis)

financing to priority sectors by both the types of banks as a whole, mainly

finance to Agriculture, Small Scale Industries and other priority sectors. It also

evaluated the level of Non-performing Advances of Public and Private Sector

Banks to Total Priority Sector. It was found from the study that priority sector

advances and agricultural advances of both the types of banks had improved

manifold over the study period. But, they were still lacking behind to achieve

the targets set for them by RBI in agriculture sector. It was observed that the

performance of private sector banks in respect of all the parameters was better

than that of public sector banks. It is suggested to increase the attention of both

the public and private sector banks on the priority sector of the economy.

Pacha Malyadri, S. Sirisha (2011)20

―A Comparative Study of Non

Performing Assets in Indian Banking Industry‖. The scope of the study was

limited to the analysis of NPAs of the public sector banks and private sector

banks NPAs pertaining to only weaker sections for the period seven (7) years

i.e. from 2004-2010. It examined trend of NPAs in weaker sections in both

public sector and private sector banks. The study observed that the public

sector banks have achieved a greater penetration compared to the private sector

banks vis-à-vis the weaker sections. It is found on the basis of analysis that

there is significant improvement in the management of nonperforming assets of

the public sector banks in India. The study finally observes that the prudential

and provisioning norms and other initiatives taken by the regulatory bodies has

pressurized banks to improve their performance, and consequently resulted into

trim down of NPA. But at the same time reforms failed to bring banking

system at a par with international level and still the Indian banking section is

mainly controlled by government as PSB‘s being leaders in this sphere. It is

20

suggested that government should formulate bank specific policies and should

implement these policies through Reserve Bank of India to face competition at

national and international level.

A Study (2011)21

on ―Effects of Reserve Bank of India (RBI) Regulations on

Priority Sector Lending for Micro Finance Institutions (MFIs)‖. This study is a

collaboration of six MRAP professors and two CMF researchers. The study

involves researchers interviewing 32 MFIs representatives across 7 states to

understand their perspectives on the effect of some of the Malegam Committee

recommendations and Reserve Bank of India (RBI) guidelines for MFIs to

qualify for priority sector advances. Altogether, the researchers interviewed 15

NBFC-MFIs and 17 NGO-MFIs, a total of 32 MFIs in 7 states viz. a) Andhra

Pradesh b) Delhi c) Karnataka d) Maharashtra e) Orissa f) Tamil Nadu and g)

West Bengal. In this paper the researchers presented how microfinance

institutions are responding to the new RBI regulations. The paper also

reviewed responses from the MFIs and present the findings highlighting

practitioners‟ outlook towards the strengths and weaknesses of some of the

RBI guidelines mentioned above. It highlighted the current funding situation

among the interviewed MFIs and how these MFIs have changed their business

strategies to fit into the regulations.

Dr. Suresh Patidar and Ashwini Kataria (2012)22

, ―Ananalysis Of Npa In

Priority Sector Lending: A Comparative Study Between Public Sector Banks

And Private Sector Banks Of India‖. This study examined the NPA in Priority

Sector Lending and carried a comparative study between public sector banks

and private sector banks. The study analyzed priority sector to find out the

percentage share of NPA of components of priority sector lending, to study

whether there is significant difference between NPA of SBI & Associates, Old

Private Banks and New Private Banks with the NPA of Nationalized Banks, the

benchmark category, and to find out the significant impact of Priority Sector

Lending on the Total NPA of Banks using tools like regression analysis and

ratio analysis. The data used for the study taken for 10 years i.e. 1999 to 2008.

The result showed that there is a significant impact of priority sector lending on

total NPA of Public Sector banks, whereas in case of Private Sector Banks,

21

there was no significant impact of priority sector lending on total NPA of

Banks. Also the result showed the significant difference between NPA of SBI&

Associates, Old Private Banks and New Private Banks with the NPA of

Nationalized Banks, the benchmark category.

S. Rajamohan & D. Durairaj (2012)23

―Empowering SMEs Through Priority

Sector Advances‖. This paper enlightens the overview of Small & Medium

Enterprises(SMEs), SMEs contribution for export, Financing for SMEs,

Challenges and opportunities, and suggestions. This sector contributes 8 per

cent of the nation GDP, 45 percent of the manufactured output and 40 percent

of exports. The MSMEs provide employment opportunities to 60 million

persons through 26 million enterprises. The labour to capital ratio in MSMEs

and the overall growth in the MSME sector is much higher than in the large

industries. It concluded that Commercial Banks should come out of the

traditional asset based lending mind set, while devising cash flow or collateral-

based lending models, and simplified assessment, appraisal models must be

introduced. Small & Medium Enterprises look of convenience and simplicity in

their banking requirements and these should be delivered through the effective

use of technology by the banks. Banks should view priority sector lending to

the SMEs as a profitable avenue rather than an avenue for forced lending.

Dr. Bharat M. Kher (2013)24

, ―The Role of Rural Banks in the Development

of rural Socio-economy‖. The study attempted to make an appraisal of the rural

credit structure and the role played by RRBs in the development of rural

economy. The objective of this paper was to analyses the rural credit and the

role played by the RRBs in the priority and non-priority sector landings. This

paper examined the rural credit structure of the India and Gujarat state in the

role played by the RRBs. The study confined only to the specific area like loan

and advance made by the RRBs especially priority and none-priority sectors for

the six years period starting for 2002-2003 to the year 2008-2009. It concluded

that the disbursements of short-term loans for crops during the study period are

encouraging and it constituted a higher rate than that of term-loans. Also the

loans provide by the RRBs to various groups in the priority sector shows an

22

increasing trend. The gap between short-term loans for crop and the term-loans

for agricultural and allied activities need to be minimized.

Najmi Shabbir (2013)25

A study on ―Sector Wise Priority Sector Advances in

India‖. The researcher carried out comparative analysis of Agricultural

Advances and Small Scale Industries Advances by Scheduled Commercial

Banks (as a whole) and by Public Sector Banks (as a whole) during the period

from 1969 to 2011. It was observed that the share of agriculture credit in net

bank credit has increased in last ten years. However, share of direct agriculture

credit has come down from 80% in 1999 to 68% in 2007. In an analysis

between SCBs and PSBs, it concluded that in direct agriculture credit as well

as in credit to SSIs, the share of PSBs is hither as compare to SCBs as a whole.

The growth rate of lending to SSIs was the highest in 2006 and 2007. It was

mainly due to several favourable policy initiatives undertaken by Central

Government and the Reserve Bank of India for stepping up of credit to Small

and Medium Enterprises in 2005. Over the study period, indirect advances to

agriculture had increased as compare to direct credit to agriculture.

Najmi Shabbir (2013)26

, ―Region wise Priority Sector Advances in India‖.

The study focussed at the geographical distribution of Priority Sector

Advances(PSA). After nationalisation of the Banks directed lending to certain

sectors, such as, Agriculture, Small Scale Industries and weaker section and

others, collectively known as Priority Sector was emphasized. Under this

Sectoral and Sub-sectoral targets have been revised from time to time, for the

upliftment of these sectors and to bring about a balanced development of the

country. PSA was not uniformly distributed. In some parts of the country the

advances to priority sector is above the required level, while in some other

parts of the Country, it is less than the required level. For this purpose the

researcher has made a regional analysis. In the regional analysis the Country

has been divided into six regions namely Northern region, North Eastern

region, Eastern region, Central region, Southern region, where we look at PSA

in all regions. The study carried out for four points of time namely 1996-97,

2000-01, 2006-07 and 2011-12. The study revealed how the performance of the

regions has been changing in financing priority sectors.

23

B.Selvarajan & Dr. G. Vadivalagan (2013)27

, a study on ―Management of

Non Performing Assets in Priority Sector reference to Indian Bank and Public

Sector Banks (PSBs)‖. The study analysed (percentage method) i) priority

sector advances in detail under three major heads, viz., Agriculture, Small

Scale Industries and Other Priority Sector and ii) NPA from priority sector of

Indian Bank and other Public Sector Banks (as a whole) for 10 years i.e. from

2002 to 2011. Further weaker section advances, which forms part of Priority

sector, have also been studied. They are of the opinion that the problem of

NPAs is tied up with the issue of legal reforms. This is an area which requires

urgent consideration as the present system that substantially delays in arriving

at a legal solution of a dispute is simply not tenable. The absence of a quick

and efficient system of legal redress constitutes an important ‗moral hazard‘ in

the financial sector, as it encourages imprudent borrowers. Major portion of

bad debts in Indian Banks arose out of lending to the priority sector at the

dictates of politicians and bureaucrats. The absence of proper bankruptcy laws

and the dilatory legal procedure in enforcing security rights are the root cause

of bad debts in banks.

H.N.Harakantra, Dr.(Smt). V.Sharadha, and Dr.N.S.Mugadur (2014)28

, on

―Priority Sector Lending of Commercial Banks in North Kanara District : An

Overview‖. The paper discussed about the role of Commercial Banks in

Priority Sector Lending in India. They have analyzed contribution of Public

Sector Banks(as a whole) and Private Sector Banks (as a whole) in financing

priority sector in India and examined the trends of priority sector lending in

India as well as in North Kanara District. The study period taken from 2002-03

to 2011-12. The study is based on secondary data. The study concluded that

priority sector financing specifically agricultural advances had improved

manifold in both the types of banks. Further, it was observed that priority

sector lending by private sector banks is higher than that of public sector banks

during the study period. They have also suggested that banks should provide

more advances to Small Scale Industries in India as well as in North Kanara

District and banks should be given some incentives also to achieve the targets

set for priority sector lending.

24

Laveena and Meenakshi Malhotra (2014)29

, ―Empirical Analysis of Non

Performing Assets Related to Private Banks of India‖. They examined the

trend of NPA‘s over the past 8 years and the relationship between NPA‘s and

profitability of private sector banks. According to the Reserve bank of India

priority sector lending must be promoted so that those sectors who can‘t

approach the organized market for lending purposes and can‘t afford the higher

commercial rate of interest, can get loans in an easy way. RBI specified the

percentage of loans to priority sectors out of the total money lent by the banks.

This paper examines the NPA in Priority Sector Lending and the impact of

priority sector lending on the gross NPA of private sector banks. The study

period is taken from 2005 to 2012. The result showed the significant impact of

priority sector lending on gross NPA of private Sector banks. The result

showed the significant impact of priority sector lending on gross NPA of

private Sector banks. It suggested that it's important to target Nonperforming

assets Growth and try to find ways, measures and strategies to control and

regulate the level of NPA to a maximum extent.

2.4 Articles, Studies, Reports

Rajaram Dasgupta (2002)30

, an article on ―Priority Sector Lending‖. This

paper advocated a new approach to priority sector lending, suggesting among

other things the reduction of mandatory credit to a larger number of sectors and

sections, including marginal farmers, cottage industries, small trade and

services and low income housing; incentives to improve credit flow to small-

scale industries and food crop agriculture as well as temporary credit to assure

credit to new industries and new professions by the non-poor section. In 1972

that a definition of the priority sector for lending was first made. Following the

Narasimham Committee recommendations, there have been moves made to

dilute this definition. However, the priority sector appears as nothing more than

several diverse items clubbed together.

25

K. Kanagasabapathy (2012)31

, article on ―Redefine priority sector lending‖. It

was advocated that Priority sector lending must be reoriented to promote

growth, infrastructure and employment, leaving equity to financial inclusion

initiatives. It addressed three aspects of PSL — a) the level, b) the economic or

sectoral dimensions and scope; and c) the social and equity aspects. It argued

that a new approach to PSL is needed if it is to serve its intended purposes.

The author observed that the problem with the present priority sector guidelines

is its multiple and complex categorisation, incorporating several objectives,

viz, growth, employment, and equity. He suggested that it is imperative that

the priority sector should be redefined more from the standpoint of growth and

employment, and the equity angle should be served through the policy of

financial inclusion. The level and sub-targets should be rearranged to cover

really the vulnerable groups as recommended by the Narasimham committee,

and recently by the Nair committee.

In an Article (2013)32

, ―Priority Sector Lending (PSL) to Minorities Crossed

15 Percent Mark in 2012-2013‖, published in Current Affairs & Analysis, it

is observed that Priority Sector Lending (PSL) to Minorities increased

considerably from 10.60 percent of total PSL in 2007-2008 to 15.01 percent in

2012-2013. Priority Sector Lending (PSL) to minorities belongs to one of the

schemes which are covered under the Prime Minister‘s New 15 Point

Programme for Welfare of Minorities. An increase was observed because of

lending of 171960.71crore Rupees as on September 2012 to the minorities.

Self-employment initiatives were created and sustained because of bank credit.

The increase was observed because of sustained efforts of government of India.

In order to increase credit flow to the minorities, various steps were undertaken

by the Government. These included: i)RBI issued directions on Priority Sector

Lending in order to improve credit facilities to the minorities. ii) From 2007-

2008 to 2011-2012, 5954 branches of bank were opened in those areas where

there was substantial minority population. iii) Regular monitoring of Public

Sector Banks was done for checking disposal of loan applications for the

minorities. iv)14244 awareness campaigns were organised by Public Sector

Banks in 15466 towns and blocks which covered minority population. Priority

Sector Lending (PSL) to Minorities in the absolute terms increased from

26

58662.67 crore Rupees in 2007-2008 to 171960.71crore Rupees as of

September 2012

Surabhi Prasad (2014)33

, an article on ―Priority Sector woes for foreign

banks‖. In 2012, RBI has asked foreign banks having more than 20 branches

in the country to lend up to 40 per cent of their adjusted net bank credit to

priority sectors, with 18 per cent exposure to agriculture. But as most foreign

banks having lack of rural linkages, interested in earlier norms of 32 per cent of

their net bank credit to go to priority sectors. In 2014, RBI has eased norms for

subsidiarization of foreign banks positively.

A report (2006)34

on ―An Investigation into the Measures Affecting the

Integration of ASEAN's Priority Sectors (Phase 1)‖. In the report 11 priority

sectors are identified viz. Agro based products, fisheries, textiles and others.

The aim of the project was to identify relevant measures in each group and then

to identify the significance of various measures. The significance of the

measures provides a guide to priorities for action in terms of sectors and

instruments. It also aimed to design a procedure for the collection of

information about and the assessment of the significant of barriers to market

integration. The report discussed about process for producing that information

with a focus on goods and services and also compiled details of existing

inventories of policy.

Ben Thornley, David Wood, Katie Grace and Sarah Sullivant (2011)35

, A

Case Study on ―Priority Sector Lending : Impact Investing – A Framework for

Policy Design And Analysis‖. The study discussed implications of proposed

PSLCs. In 2009, the Rajan Commission on Financial Reform proposed PSLCs

(Priority Sector Lending Certificates) as a way to balance between profitability

for banks and the inclusion of India‘s poorest in the financial system. Lenders

like Micro Finance Institutions(MFIs) could issue PSLCs, and banks could

purchase them to fulfill regulatory requirements. Such a system would enable

microfinance institutions and other nontraditional lenders to leverage

significant cost advantages over banks in serving poor urban and rural

borrowers and increase the flow of capital to underserved sectors. PLSCs aim

27

to solve the problems of portfolio sales by allowing banks to purchase

standardized, tradable credits for loans made by nontraditional financial

institutions, while the assets remain on the books of the original lender. A

successful PSLC scheme could increase the size and scope of the MFI sector,

diverting a significant amount of capital to the weaker section through MFIs

and rural lending cooperatives. PSLCs may be an important step toward

lowering the cost of providing credit to priority sectors.

An Analysis(2013)36

, ―Re-Prioritizing Priority Sector in India : Impact of

Priority Sector Lending on India‘s Commercial Banks‖. The focus of this study

was to evaluate the impact of India‘s priority sector lending on the banks

operating in India using available data and considering the revised guidelines

on PSL introduced by the Reserve Bank of India (RBI) in 2012. Specifically,

the study analyzed the growth of credit supply to three major priority sectors –

agriculture, micro and small enterprise (MSE) sector and exports and evaluates

the growth of these sectors in the light of the costs of lending to these priority

sectors by public, private and foreign sector banks. The study concluded that

the contribution of PSL in increasing the credit supply to priority sectors,

primarily agriculture, MSEs and export in India is clear. However, imposing

mandatory PSL restrictions on all types of SCBs uniformly, is not only an

inefficient means of meeting the needs of the sectors, but is also costly for the

banks. It suggested strengthening of specialized financial institutions like

RRBs, cooperatives and MFIs to meet the credit needs of these priority sectors

and stimulate positive feedback effect on the growth of these sectors.

2.5 Books

L.K.Naidu(1986)37

, ―Bank Finance for Rural Development‖. The book

includes collection of papers presented at The National Seminar on ―Bank

Finance for Rural Development‖. The seminar was jointly sponsored by the

State Bank of India, Department of Economics – S.V.University at Tirupati and

the Regional Office of State Bank of India at Tirupati for two days on 7th

and

8th April, 1984. The book focuses mainly on the issues relating to theory,

28

policy and practice of bank finance in relation to rural development. It

attempts to provide a perspective for extending bank finance for rural

development in a developing economy like India. It also studies various

concept of Priority Sector Lending viz. problems and remedies, bank finance

and agriculture, Priority Sector lending & rural development, financing of

weaker sections by commercial banks etc.

V.K.Vashistha(1987)38

, ―Role of Financial Institutions in Regional

Development of India‖, Prateeksha Publication, Jaipur. The period covered for

the purpose of the study is 1950-1980 i.e. for the first 30 years of era of

Economic Planning. The sample of the study is 3 term lending institutions viz.

Industrial Development Bank of India (IDBI), IFCI and ICICI. The purpose of

the study was to analyze growth & pattern of financing by term lending

institutions. The study concluded that still there were regional industrial

imbalances to be reduced significantly by undertaking various measures by

concerned agencies.

L.M.Bhole(1995)39

, in his book ―Financial Institutions and Markets –

Structure, Growth and Innovations‖, provides understanding of the working of

financial markets and institutions in India during the period 1951-52 to 1978-

79. The book highlights the growth of the financial system in respect of size,

changes in its organisational structure and the occurrence of diversification and

innovations in financial instruments and practices.

Kishanjit Basu & Krishan Jindal(2000)40

, ―Micro Finance: Emerging

Challenges‖. Editors of this book are from Bankers‘ Institute of Rural

Development, Lucknow. With a view to propagate the concept of

microfinance, Bankers‘ Institute of Rural Development (BIRD) has organised a

workshop on ―Kick Starting Microfinance, A Challenge for Indian Banks in

1998. This book is outcome of papers presented in the workshop organised by

BIRD. It contains papers covering various aspects related to microfinance like

innovations in microfinance by banks, microfinance institutions, strategies for

future, role of Apex organisations like NABARD, SIDBI, in microfinance etc.

One of suggestions is that the banks need to devise new lending products, and

29

innovative systems and procedures to reduce the cost of lending for providing

credit to the poor. Also suggests that there is a need to establish an apex

organisation of microfinance at the national level which should work for

advocacy of microfinance and also for networking among NGOs, Banks and

Governments.

K. G. Karmakar(2002)41

, ―Rural Credit and Self Help Groups – Microfinance

Needs and Concepts in India‖. The book consists of four parts. They mainly

discusses about rural credit, microfinance and Self Help Groups (SHGs). The

four parts deals respectively with i)Rural Credit Problems .& Propects

ii)Analysis of Microfinance Needs iii)Role of Self Help Groups iv)Strategies

for Sustainable Rural Credit Delivery.

B.B.Padhiari & P. Ch. Misra (2004)42

, ―Rural Housing Finance‖. The book

deals with – ‗Rural Housing Finance in Orissa – The Role of Housing and

Urban Development Corporation (HUDCO) Ltd. The study was conducted to

evaluate the operational performance of HUDCO in rural housing sector. It

suggested that the rural beneficiaries should be provided subsidized housing

finance loan at lower rate of interest. The share of subsidy should be borne by

the central/state and local governments. So that local poor can fulfil their long

cherished dream to own a house with affordable nominal share.

S.K.Mishra & V.K.Puri(2006)43

, in their book ―Indian Economy‖, have

discussed issues relating to basic issues of agriculture, production and

productivity, land reforms, agricultural finance & marketing, role of public

sector in Indian economy etc. The book focused on financial problems as one

of internal causes of industrial sickness.

Ruddar Datt & K.P.M.Sundaram (2008)44

, ―Indian Economy‖. The book

covers all aspects of Indian economy relating to Indian agriculture under five

year plans, organisation of rural credit in India, need for credit for Indian

farmers, role of commercial banks in satisfying needs of rural credit etc. It also

focuses Service Area Approach- new strategy for rural lending, the success of

SHGs in both urban and rural areas & their positive effects on poverty

30

alleviation. The book also discuss various aspects related to micro finance,

role of micro finance, weaknesses of micro finance etc.

O.P.Agarwal(2008)45

, ―Modern Banking of India‖. The book discusses in

detail about Priority Sector Financing i.e. to primary sector, secondary sector

and tertiary sector. It also describes about small scale industries (SSIs),

appraisal methods, credit flow to SSIs, major problems and challenges faced by

the SSIs etc.

Dr. K. Ravichandran(2008)46

, ―Merchant Banking and Financial Services‖.

The book mainly covers micro credit concept of Priority Sector Lending like

housing finance, microfinance, role of SHGs, role of Non Government

Organisations (NGOs) in micro credit, micro credit lending models, legal

framework related to micro credit etc.

G. Vijayaragavan(2009)47

, ―Bank Credit Management‖. As the title suggests,

the book discusses in detail various aspects of bank credit like credit policies &

appraisal, disbursement & monitoring etc. Unit 2 deals with Priority Sector

Advances i.e. agriculture finance, housing finance, micro finance, export credit

etc. Unit 4 focuses on understanding of performing & non-performing credit,

RBI‘s concern on credit analysis & gaps by bankers, credit recoveries,

strategies & mechanism for recovery of credit etc.

Vasant Desai(2009)48

, ―The Indian Financial System and Development‖. The

book describes in detail the macro economic environment. It provides an

insight into the financial system in India and its unique role in the Indian

Economy.

Dr. D. D. Mukherjee (2014)49

, ―Credit Appraisal, Risk Analysis & Decision

Making – An Integrated Approach to on and off Balance Sheet Lending‖. The

book covers all aspects of financing by commercial banks to different segments

of the economy, fund based and non fund based finance, analysis of balance

sheet, detailed understanding of credit appraisal techniques, theoretical aspects

of lending by banks, RBI guidelines regarding lending etc.

31

However all these studies did not cover each priority segment wise analysis of

all public sector banks in India. Furthermore, impact of each priority sector on

each major financial performance indicator of each public sector bank has not

been simultaneously studied. In the light of the above lapses, the present study

will go a long way in filling up the gap.

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21. A Study (2011) on ―Effects of Reserve Bank of India (RBI) Regulations

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34

29. Laveena and Malhotra, Meenakshi (2014), ―Empirical Analysis of Non

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35

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36