Indian banks stepped up lending in the first Quarter, contributing to the growth of the Priority Sector by extending credit on favorable terms in Minorities Community Lending (MCL).
The growth in the percentage share of MCL, in total Priority Sector Lending (PSL) show banks have been working in accordance with the reform policies of the Government of India (Ministry of Finance, 18 September 2014). The top 5 Indian banks (PSUs) having the largest percentage share of MCL Outstanding in total PSL are Punjab & Sind Bank, State Bank of Travancore, State Bank of India, State Bank of Patiala and Canara Bank. Though State Bank of India is on the third position in Percentage terms, it is the top most bank as per MCL Outstanding in terms of absolute amount i.e. Rs. 53671 crores out of the total PSL of Rs.278590 Crores as on Quarter ending March 31, 2014.
All the 27 Indian PSU banks including IDBI and Bhartiya Mahila Bank, put together, have MCL Outstanding of Rs. 240838 crores out of the total PSL of Rs.1497055 crores as on the Quarter ending March.
Priority sector refers to those sectors of the economy which may not get timely and adequate credit in the absence of special exemptions. Typically, these are small value loans to farmers for agriculture and allied activities, micro and small enterprises, poor people for housing, students for education and other low income groups and weaker sections of the economy (Reserve Bank of India, 2014). The central bank revised guidelines on lending to steady credit growth and avoid the big fluctuations that unnerved the market, October 2013.