PSBs priority sector lending surpass advances to PSUs

Updated: Dec 27 2006, 08:25am hrs
Priority sector lending of major public sector banks (PSBs) in percentage terms over five years has grown at a higher rate than their lending to public sector undertakings (PSUs) from April-March 2002 to April-March 2006.

For PSBs, the compounded annual growth rate (CAGR) is 21.3%, while the average lending to PSUs by the PSBs increased by only 3.6% in the period. Indias largest commercial bank, State Bank of India (SBI), showed a 0.8% CAGR of lending to PSUs against growth of 20.4% CAGR in its priority sector lending during the study period. Ananda Bhoumik, senior director, Fitch Ratings India, said, Priority sector lending was boosted by the rapid rise housing loans during the last few years.

In actual value terms, the total lending to priority sector of 25 major PSBs increased steadily from Rs 1,43,655 crore in April-March 2002 to Rs 3,76,693 crore in April-March 2006. On the other hand, total advances to PSUs by PSBs also increased but marginally from Rs 89,506 crore to Rs 1,07,070 crore in the same period.

Among the 25 PSBs, the highest CAGR in priority sector lending was seen in case of United Bank (35.1%) followed by SB of Travancore (27.9%) and UCO Bank (26.9%).

The total priority sector advances of United Bank steadily rose from Rs 1,326 crore in April-March 2002 to Rs 5,980 crore in April-March 2006. The lowest CAGR was witnessed in the case of Corporation Bank (14.2%) followed by Central Bank (14.7%) and Dena Bank (15.6%). The priority sector lending of Corporation Bank increased from Rs 4,100 crore in April-March 2002 to Rs 7,972 crore in April-March 2006.

Similarly, in the case of PSU lending, the highest CAGR was registered in the case of Oriental Bank of Commerce (OBC) (44.3%) followed by SB of Patiala (13.4%) and Union Bank (13.3%).

The total lending to PSUs of OBC shot up from Rs 879 crore to Rs 5,495 crore during the period under study.

The lowest CAGR of PSU lending came from SBI (0.8%) followed by SB Of Mysore (2.4%) and Bank of Maharashtra ( 3.2%). The total lending to PSUs of SBI increased from Rs 21,990 crore in April-March 2002 to Rs 22,876 crore in April-March 2006. Out of 25 PSBs, negative CAGR of PSUs was registered in the case of eight banks. The highest fall in CAGR was seen in the case of SB Of Indore (-13.2%) during the study period.