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VOL. 7, ISSUE 4 (2025)
A comparative analysis of priority sector lending performance and volatility across public, private, and foreign Banks in India
Authors
Dr. Provinder Kumar
Abstract
This study presents a comparative analysis of
Priority Sector Lending (PSL) performance and volatility across Public Sector
Banks (PSBs), Private Sector Banks (PVBs), and Foreign Banks (FBs) in India
from 2015 to 2024. Drawing on secondary data from RBI publications and bank
financial statements, the analysis employs descriptive statistics to assess
trends in credit growth, sectoral allocation, and the stability of lending
practices. The findings reveal distinct strategic approaches, PSBs demonstrate
stable, high-volume lending with a broad-based commitment to inclusion, yet
face concerns over asset quality. PVBs exhibit aggressive, high-growth lending
concentrated in commercially attractive segments such as MSMEs and housing, but
with significant volatility and a weaker focus on social sectors, indicating
compliance-driven motives. Conversely, FBs adopt a minimalist strategy,
focusing narrowly on high-value MSMEs while showing extreme volatility and
tokenism in other priority sectors, reflecting a compliance-oriented rather
than inclusive approach. The research concludes that the standardized Priority
Sector Lending (PSL) framework leads to varied outcomes across bank types,
attributable to their distinct institutional characteristics. To improve the
framework's efficacy and true inclusiveness, the study proposes differentiated
regulatory measures: promoting technological integration in public sector
banks, creating incentives for stability in private banks, and enforcing direct
lending protocols for foreign banks.
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Pages:7-10
How to cite this article:
Dr. Provinder Kumar "A comparative analysis of priority sector lending performance and volatility across public, private, and foreign Banks in India". International Journal of Finance and Commerce, Vol 7, Issue 4, 2025, Pages 7-10
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