Lok Sabha Question No. 153 (STARRED), answered on 2025-03-10
Subject: Credit Disbursement to Priority Sectors
Ministry: FINANCE
Asked by: Dr. Shrikant Eknath Shinde, Smt. Shambhavi

## Government of India Ministry of Finance Department of Financial Services

## LOK SABHA

Starred Question No. *153

Answered on Monday, 10 March, 2025/19 Phalguna, 1946 (Saka)

## Credit Disbursement to Priority Sectors

- *153   Dr Srikant Eknath Shinde:

Smt Shambhavi:

Will the Minister of Finance be pleased to state:

- (a) the details of the increase in credit disbursement to priority sectors, such as agriculture, MSMEs and infrastructure, as a result of the banks' financial growth since 2019, bank-wise and year-wise;
- (b) the way by which the Indian banks have leveraged fintech collaborations to expand their service portfolio and enhance customer satisfaction;
- (c) the mechanism in place to monitor the compliance of banks with regulatory norms to maintain financial stability and prevent future crises;
- (d) the steps taken by the Government to help Indian banks in reducing Non-Performing Assets (NPAs) and their outcomes; and
- (e) whether the Government is considering any policy reforms to ensure the sustainable financial performance of Indian banks and if so, the details thereof?

## Answer

THE FINANCE MINISTER (SMT. NIRMALA SITHARAMAN)

- (a) to (e): A statement is laid on the Table of the House.

*****

(a) :  The overall credit disbursement to priority sectors including Agriculture, MSME and Social Infrastructure by banks in 2019 was ₹23,01,567 crores, which has risen to ₹42,73,161 crores in 2024, recording an increase of 85% over the six-year period.

The  bank-wise  and  year-wise  details  of  credit  disbursement  to  priority  sectors,  such  as agriculture, Micro Small and Medium Enterprises (MSMEs), and Social Infrastructure from 2019 to 2024, as reported by Reserve Bank of India (RBI) is given at Annexure .

(b) : As  the  financial  landscape  continues  to  evolve  and  to  enhance  quality  of  banking services  for  customers,  banks  have  been  collaborating  with  FinTechs  for  provisioning  of various  services  to  the  customers.  Some  of  the  major  areas  where  FinTechs  are  further augmenting Banking products / services with seamless delivery thereby enhancing customer experience are:

- Openings  of  savings  account  through  e-KYC,  V-KYC  processes  leveraging Artificial Intelligence (AI) technology for Face recognition and Name match etc.
- Digital Loan journeys such as account statement analysis, leveraging alternate data in Underwriting etc. for quick credit assessment and real-time decision making.
- Development of innovative products for customers using APIs of banks.

(c): The Reserve Bank of India (RBI) has informed that compliance to its guidelines issued is examined  on  sample  basis  during  the  Supervisory  Assessment  and  any  non-compliance observed  are  taken  up  with  the  concerned  supervised  entities  for  rectification  apart  from initiating  supervisory/  enforcement  action,  as  deemed  fit.  As  regards  financial  stability,  in terms of the mandate given by the Banking Regulation Act, 1949 and the Reserve Bank of India  Act,  1934,  the  regulatory  and  supervisory  framework  of  RBI  is  guided  towards  the overarching  principles  of  safeguarding  customers  interest  and  preservation  of  financial stability, among others. Further, the regulatory and supervisory frameworks for the regulated entities  have  been  designed  on  the  principle  of  proportionality  consistent  with  their  risk profiles. RBI has taken several measures to strengthen supervisory approach to make it more forward looking, risk-oriented and analytical, which is aimed at identifying vulnerable sectors, borrowers as well as supervised entities.

(d) &(e): Government and RBI have taken various measures to improve financial soundness of  banks  and  to  address  the  issues  related  to  credit  discipline,  responsible  lending  and improved  governance,  adoption  of  technology,  recovery  and  reduction  of  NPAs.  These measures include, inter alia, the following:

- i. Public Sector Banks have set-up specialized stressed assets management verticals and branches for effective monitoring and focused follow-up of NPA accounts, which  facilitates  quicker  and  improved  resolution/  recoveries.  Deployment  of Business correspondents and adoption of Feet-on-street model have also boosted the recovery trajectory of NPAs in banks.
- ii. Prudential  Framework  for  resolution  of  stressed  assets  was  issued  by  RBI  to provide a framework for early recognition, reporting and time bound resolution of stressed  assets,  with  a  build-in  incentive  to  lenders  for  early  adoption  of  a resolution plan.
- iii. Minimum provisioning requirements have been prescribed for both standard and non-performing advances.
- iv. Credit  discipline  was  instilled  through  the  enactment  of  the  Insolvency  and bankruptcy Code, set up of the Central Repository of Information on Large Credits and systematic checking of high-value accounts for wilful default and fraud.
- v. The  Securitisation  and  Reconstruction  of  Financial  Assets  and  Enforcement  of Security Interest  (SARFAESI)  Act,  2002  and  the  Recovery  of  Debt  and Bankruptcy Act have been amended to make it more effective.
- vi. Institution  of  comprehensive,  automated  Early  Warning  Systems  in  banks  to proactively detect stress and reduce slippage into NPAs.
- vii. A  Reform  Agenda  of  PSBs  through  a  unique  Enhanced  Access  &  Service Excellence  (EASE)  Reforms  has  been  initiated.  It  has  enabled  objective  and benchmarked  progress  on  all  key  areas  in  PSBs  viz.,  governance,  prudential lending, risk management, technology, data-driven banking and outcome-centric HR.
- viii. The amalgamation of banks, the efficacy and effectiveness of the banking sector has been enhanced by leveraging economies of scale and synergies.

*****

| Credit disbursement to Priority sectors including s Agriculture, MSMEs and Social infrastructure from 2019-2024   | Credit disbursement to Priority sectors including s Agriculture, MSMEs and Social infrastructure from 2019-2024   | Credit disbursement to Priority sectors including s Agriculture, MSMEs and Social infrastructure from 2019-2024   | Credit disbursement to Priority sectors including s Agriculture, MSMEs and Social infrastructure from 2019-2024   | Credit disbursement to Priority sectors including s Agriculture, MSMEs and Social infrastructure from 2019-2024   | Credit disbursement to Priority sectors including s Agriculture, MSMEs and Social infrastructure from 2019-2024   | Credit disbursement to Priority sectors including s Agriculture, MSMEs and Social infrastructure from 2019-2024   |
|-------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------|
|                                                                                                                   |                                                                                                                   |                                                                                                                   |                                                                                                                   |                                                                                                                   | (Amount in ₹ crores)                                                                                              | (Amount in ₹ crores)                                                                                              |
| Category                                                                                                          | Year                                                                                                              | Public Sector Banks                                                                                               | Private Banks                                                                                                     | Foreign Banks                                                                                                     | Small Finance Bank                                                                                                | Grand Total                                                                                                       |
| Overall PSL                                                                                                       | 2019                                                                                                              | 1168693                                                                                                           | 841206                                                                                                            | 241348                                                                                                            | 50321                                                                                                             | 2301567                                                                                                           |
| Overall PSL                                                                                                       | 2020                                                                                                              | 1165301                                                                                                           | 935266                                                                                                            | 221134                                                                                                            | 60576                                                                                                             | 2382277                                                                                                           |
| Overall PSL                                                                                                       | 2021                                                                                                              | 1344415                                                                                                           | 953808                                                                                                            | 250288                                                                                                            | 38905                                                                                                             | 2587416                                                                                                           |
| Overall PSL                                                                                                       | 2022                                                                                                              | 1089869                                                                                                           | 1315571                                                                                                           | 298793                                                                                                            | 68122                                                                                                             | 2772356                                                                                                           |
| Overall PSL                                                                                                       | 2023                                                                                                              | 1293632                                                                                                           | 1670355                                                                                                           | 347487                                                                                                            | 98862                                                                                                             | 3410336                                                                                                           |
| Overall PSL                                                                                                       | 2024                                                                                                              | 1853161                                                                                                           | 1978188                                                                                                           | 339016                                                                                                            | 102797                                                                                                            | 4273161                                                                                                           |
| Agriculture*                                                                                                      | 2019                                                                                                              | 525617                                                                                                            | 305124                                                                                                            | 36807                                                                                                             | 19242                                                                                                             | 886791                                                                                                            |
| Agriculture*                                                                                                      | 2020                                                                                                              | 580226                                                                                                            | 374673                                                                                                            | 35520                                                                                                             | 22428                                                                                                             | 1012847                                                                                                           |
| Agriculture*                                                                                                      | 2021                                                                                                              | 644780                                                                                                            | 412374                                                                                                            | 43446                                                                                                             | 18360                                                                                                             | 1118959                                                                                                           |
| Agriculture*                                                                                                      | 2022                                                                                                              | 623244                                                                                                            | 490808                                                                                                            | 56907                                                                                                             | 27866                                                                                                             | 1198824                                                                                                           |
| Agriculture*                                                                                                      | 2023                                                                                                              | 745126                                                                                                            | 589507                                                                                                            | 347487                                                                                                            | 43249                                                                                                             | 1725369                                                                                                           |
| Agriculture*                                                                                                      | 2024                                                                                                              | 1036866                                                                                                           | 678637                                                                                                            | 66654                                                                                                             | 45509                                                                                                             | 1827666                                                                                                           |
| MSME                                                                                                              | 2019                                                                                                              | 549694                                                                                                            | 456402                                                                                                            | 72620                                                                                                             | 20339                                                                                                             | 1099055                                                                                                           |
| MSME                                                                                                              | 2020                                                                                                              | 495986                                                                                                            | 527993                                                                                                            | 77990                                                                                                             | 25473                                                                                                             | 1127443                                                                                                           |
| MSME                                                                                                              | 2021                                                                                                              | 507459                                                                                                            | 512141                                                                                                            | 81963                                                                                                             | 9032                                                                                                              | 1110595                                                                                                           |
| MSME                                                                                                              | 2022                                                                                                              | 389129                                                                                                            | 755014                                                                                                            | 109210                                                                                                            | 19331                                                                                                             | 1272684                                                                                                           |
| MSME                                                                                                              | 2023                                                                                                              | 465157                                                                                                            | 1051815                                                                                                           | 153234                                                                                                            | 31080                                                                                                             | 1701286                                                                                                           |
| MSME                                                                                                              | 2024                                                                                                              | 726254                                                                                                            | 1264447                                                                                                           | 153202                                                                                                            | 29776                                                                                                             | 2173679                                                                                                           |
| Social Infrastructure #                                                                                           | 2019                                                                                                              | 374                                                                                                               | 232                                                                                                               | 0                                                                                                                 | 78                                                                                                                | 684                                                                                                               |
| Social Infrastructure #                                                                                           | 2020                                                                                                              | 285                                                                                                               | 263                                                                                                               | 0                                                                                                                 | 124                                                                                                               | 671                                                                                                               |
| Social Infrastructure #                                                                                           | 2021                                                                                                              | 255                                                                                                               | 295                                                                                                               | 0                                                                                                                 | 12                                                                                                                | 562                                                                                                               |
| Social Infrastructure #                                                                                           | 2022                                                                                                              | 237                                                                                                               | 564                                                                                                               | 0                                                                                                                 | 6                                                                                                                 | 806                                                                                                               |
| Social Infrastructure #                                                                                           | 2023                                                                                                              | 119                                                                                                               | 520                                                                                                               | 0                                                                                                                 | 5                                                                                                                 | 644                                                                                                               |
| Social Infrastructure #                                                                                           | 2024                                                                                                              | 79                                                                                                                | 574                                                                                                               | 0                                                                                                                 | 23                                                                                                                | 676                                                                                                               |

Source: RBI