Priority Sector Lending: The Necessity to Restructure the Banks to Meet the Expanding Needs of the Economy

Abstract

Following the nationalisation of a number of significant banks, obligatory lending to priority industries achieved its goal. However, the political class sabotaged the entire process; the rural people were exploited for political benefit, and these institutions are now burdened with rising non-performing assets. Despite all of the technological advancements in the agricultural industry, it remains reliant on the rain gods, with the monsoon’s whims wreaking havoc on our country’s poor farmers. The reports of heavily in debt farmers committing suicide as a result of crop failure and their inability to meet their obligations are heartbreaking, and they necessitate a dedicated group of bank offices who can understand and appreciate the plight of these farmers, acting as a friend, philosopher and guide to the distressed farmers. This necessitates a shift in mindset at all levels of financial institutions. This article attempts to present the effect of the transition in the priority sector lending needs, reforms in the current context of shifting value systems and the necessity to build our banks along the sound lines to meet our economy’s expanding needs.