Priority sector lending guidelines, in addition to branching norms, have been an important way in which policy-makers have embedded the social contract in the Indian banking system. These guidelines require 40% of net bank credit to be deployed in specific sectors including agriculture, MSME, and housing among others. While there has been some dynamism to the sectors that are considered eligible, one glaring omission has been the absence of a regional lens. So, banks could be in full compliance with the requirements and yet leave entire parts of the country un-served. India’s top 10 districts account for more than 54% of all credit – Mumbai 22% and Delhi 13%. All of North-East India had a comparable amount of agriculture credit outstanding as Delhi. Bihar has a credit-to-GDP ratio of less than 20%
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