299 CHAPTER – 6 SUMMARY, FINDINGS & SUGGESTIONS 6.1 Introduction 300 6.2 Summary 300 6.3 Findings & Interpretation 6.3(a) for Level of Achievement of Priority Sector Lending targets – Bank Wise 302 6.3(b) for Comparative Analysis of Distribution of Lending to Priority Sectors – Bank Group Wise 305 6.3(c) for Impact of selected Priority Sector Lending Ratios upon selected Financial Ratios - Bank Wise 308 6.3(d) for Impact of selected Priority Sector Lending Ratios upon selected Financial Ratios - Bank Group Wise 321 6.4 Suggestions 323 6.5 Suggestions for Further Research 326
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299
CHAPTER – 6
SUMMARY, FINDINGS & SUGGESTIONS
6.1 Introduction 300
6.2 Summary 300
6.3 Findings & Interpretation
6.3(a) for Level of Achievement of Priority Sector
Lending targets – Bank Wise
302
6.3(b) for Comparative Analysis of Distribution of
Lending to Priority Sectors – Bank Group Wise
305
6.3(c) for Impact of selected Priority Sector Lending
Ratios upon selected Financial Ratios - Bank Wise
308
6.3(d) for Impact of selected Priority Sector Lending
Ratios upon selected Financial Ratios - Bank
Group Wise
321
6.4 Suggestions 323
6.5 Suggestions for Further Research 326
300
6.1 Introduction :
This chapter deals with the summary of the entire research work, major
findings that are derived on the basis of the analysis and interpretation of the
data, conclusions drawn as well as the suggestions.
Major findings are narrated for three parts of analysis – bank wise and
bank group wise. Findings related to impact analysis are presented selected
priority sector wise indicating impact of each selected priority sector upon
selected financial performance indicators of selected PSBs. Some of the
findings are also presented in the form of tables and charts wherever required
in order to facilitate easy access and understanding as regards findings.
Conclusions are drawn based upon the findings and finally suggestions are
offered to cope up with the adverse impact of lending to various priority sectors
upon major financial performance indicators of selected PSBs.
6.2 Summary :
The present research work has been presented in various six chapters.
The summary of each chapter has been given below:
Chapter 1 : Research Methodology
This chapter covers Title of the Problem, Research Design, Nature of the
study, Sampling Technique, Sample Size, Data collection, Scope of the
study, Objectives, Hypotheses, Outline of chapter plan, Analysis of data,
Limitations of the Study and Future Scope of the study. In this chapter,
the researcher has adopted a systematic and scientific approach for the
work and these aspects have been tested further with the help of scientific
tools of the research.
Chapter 2 : Literature Review
This chapter covers review of literature relating to concept, industry and
title. Literature refers to various journals, articles, periodicals, web sites,
news papers, books, magazine etc. in the related area of the study.
301
Chapter 3 : Conceptual Framework
This chapter covers overview of the banking sector in India, Genesis and
Evolution of the concept of priority sector lending, targets and sub targets
prescribed by Reserve Bank of India under priority sector lending by
banks, composition and classification of priority sector and several other
aspects of priority sector lending.
Chapter 4 : Sample Profile
For the purpose of the study, performance of selected Public Sector Banks
has been analysed. In this chapter researcher has narrated simple brief
history of selected banks, major performance indicators of the selected
banks.
Chapter 5 : Analysis and Interpretation
The chapter includes the analysis of various priority sectors advances by
selected PSBs in India. It also includes study of impact of these advances
upon various financial parameters of selected banks. On the basis of the
analysis, meaningful conclusions have been drawn. The researcher has
collected data for 26 public sector banks from Reserve Bank of India
website. Three different analyses are undertaken:
d) Analysis of Level of Achievement of Priority Sector Lending targets by
selected Public Sector Banks – as Proportion of Adjusted Net Bank
Credit (ANBC). For this, Average and Ratio Analysis tool is used.
e) Comparative Analysis of Lending to Selected Segments of Priority
Sector by State Bank of India & Associates Banks and Other
Nationalised Banks – Bank Group Wise. To undertake this analysis,
ANOVA test has been used.
f) Analysis of Impact of each Selected Priority Sector Lending Parameters
on each Selected Financial Parameters of Public Sector Banks. Karl
Pearson‘s Correlation Co-efficient and Test of significance have been
used for this analysis.
302
Chapter 6 : Findings and Suggestions
This chapter includes summary of each chapter, findings of the study and at
last, suggestions for effective priority sector lending by banks in India as well
as suggestions for further research.
6.3 Findings :
On the basis of present research work, the major findings of the study are as
under:
6.3(a) for Level of Achievement of Priority Sector Lending targets :
As regards to average achievement of priority sector lending targets (as
a percentage of ANBC), as stipulated by Reserve Bank of India, by selected 26
Public Sector Banks during the study period the analysis exhibits as under.
Table No. 6.1 – Level of Achievement of total PSL Targets
Total Priority Sector
Lending target of
40% of ANBC
40% &
above
1)SBI, 2)SBBJ, 3)SBH, 4)SBT,
5)Allahabad Bank, 6)Andhra Bank,
7)BOB, 8)BOI, 9)Bank of Maharashtra,
10)Canara Bank, 11)Dena Bank,
12)Indian Bank, 13)IOB, 14)OBC,
15)Punjab & Sind Bank, 16)Syndicate
Bank, 17)Union Bank of India,
18)United Bank of India, 19)UCO Bank,
Below
40%
1)SBM, 2)SBP, 3)Central Bank of India,
4)Corporation Bank, 5)Punjab National
Bank, 6)Vijaya Bank 7)IDBI
IDBI - 28.10%
303
The findings shows that majority of selected PSBs have achieved the overall
priority sector lending targets as stipulated by RBI during the study period.
However, still few of PSBs could not achieve the target. The level of
achievement by IDBI is the lowest during the study period.
Table No. 6.2
Level of Achievement of
Agriculture Advances Targets
Total Agriculture
Advances target
of 18% of ANBC
18% &
above
1)SBI 2)SBBJ 3)SBH 4)Allahabad Bank
5)Andhra Bank 6)BOB 7)Canara Bank
8)Central Bank of India 9)Indian Bank
10)IOB 11)Punjab National Bank
12)Syndicate Bank
Below
18%
1)SBM 2)SBP 3)SBT 4)Bank of India,
5)Bank of Maharashtra 6)Corporation Bank
7)Dena Bank 8)IDBI 9)OBC 10)Punjab &
Sind Bank 11)Union Bank of India
12)United Bank of India 13)UCO Bank
14)Vijaya Bank
IDBI 8.81%
Corporation Bank 10.46%
The analysis shows that only 12 of selected PSBs, could achieve the agriculture
advances targets during the study period. Other 14 banks could not achieve the
target. Overall average level of achievement of agriculture lending target is
low. Further, the achievement is far below the target in case of IDBI and
Corporation bank during the study period.
304
Table No. 6.3
Level of Achievement of
Weaker Section Advances Targets
Weaker Section
Advances target
of 10% of
ANBC
10% &
above
1)SBI 2)SBBJ 3)SBH 4)SBM 5)SBP
6)SBT 7)Allahabad Bank 8)Andhra Bank
9)Bank of India 10)Canara Bank 11)CBI
12)Indian Bank 13)IOB 14)PNB 15)Punjab
& Sind Bank 16)Syndicate Bank 17)United
Bank of India 18)UCO Bank
Below
10%
1)BOB 2)Bank of Maharashtra 3)Corporation
Bank 4)Dena Bank 5)IDBI 6)OBC 7)Union
Bank of India 8)Vijaya Bank
IDBI – 2.26%
The results shows that majority of banks could achieve the Weaker Section
Advances target of 10% during the study period. However, 8 banks could not
achieve the target. Further, again the IDBI could achieve only 2.26% during
the study period which is very low.
RBI has stipulated specific targets for these three sectors, targets for MSE,
Housing and Education Finance are covered under overall priority sector
lending targets. The overall achievement of priority sector lending, agriculture
& weaker section advances targets by selected 26 PSBs during the study period
thus can be presented as under:
Table No. 6.4 Achievement of Targets by selected PSBs (%)
Target Achieved by % of total 26 Banks
Total Priority Sector Lending Target 19 Banks 73.08%
Total Agriculture Advances Target 12 Banks 46.15%
Weaker Section Advances Target 18 Banks 69.23%
305
Figure No. 6.1 Achievement of PSL Targets
by selected PSBs (%)
Conclusion :
The study reveals that as regards to achievement of priority sector lending
targets by selected PSBs during the study period, the performance of banks
seems to be satisfactory. However, in case of agriculture advances targets, the
achievement level is found very low. Achievement level of priority sector
lending and weaker section advances targets can be considered satisfactory as
majority of selected PSBs could achieve these targets during the study period.
IDBI is lagging far behind the other banks in achievement of all targets during
the study period.
6.3 (b) Comparative Analysis of Distribution of Priority Sector
Lending – Bank Group Wise
In this analysis the results found by using ANOVA test and hypotheses are
tested at 5% level of significance with d.f.(6,35) in case of SBI & Associates
and d.f. (6,133) in other Nationalized Banks. Major finding are as under :
306
Table No. 6.5 ANOVA results for Distribution of Lending to
selected Priority Sectors – Bank Group Wise
Ratios Bank Group ANOVA
Results Findings Conclusion
Total PSL
Ratio
SBI &
Associate
Banks
F cal > F tab
2.99 > 2.34
H : Rejected
There is
significant
difference in total
Priority Sector
Lending ratio in
all selected PSBs
during the study
period.
Other
Nationalized
Banks
8.75 > 2.10
Total
Agri
Ratio
SBI &
Associate
Banks
F cal < F tab
0.65 < 2.34
H : Accepted
There is no
significant
difference in total
Agri ratio during
the study period.
Other
Nationalized
Banks
F cal > F tab
3.20 > 2.10
H : Rejected
There is
significant
difference in total
Agri ratio during
the study period.
Direct
Agri
Advances
Ratio
SBI &
Associate
Banks
F cal < F tab
0.845 < 2.34
H : Accepted
There is no
significant
difference in
Direct Agri ratio
in all selected
PSBs during the
study period.
Other
Nationalized
Banks
0.274 < 2.10
Indirect
Agri
Advances
Ratio
SBI &
Associate
Banks
F cal < F tab
1.139 < 2.34
H : Accepted
There is no
significant
difference in
Indirect Agri
ratio during the
study period.
Other
Nationalized
Banks
F cal > F tab
10.595 > 2.10
H : Rejected
There is
significant
difference in
Indirect Agri
ratio during the
study period.
MSE
Advances
Ratio
SBI &
Associate
Banks
F cal < F tab
1.741 < 2.34
H : Accepted
There is no
significant
difference in
MSE Ratio
307
during the study
period.
Other
Nationalized
Banks
F cal > F tab
9.79 > 2.10
H : Rejected
There is
significant
difference in
MSE ratio during
the study period.
Weaker
Section
(WS)
Advances
Ratio
SBI &
Associate
Banks
F cal < F tab
0.913 < 2.34
H : Accepted
There is no
significant
difference in WS
Ratio in all
selected PSBs
during the study
period.
Other
Nationalized
Banks 0.839 < 2.10
Housing
Finance
(HF) Ratio
SBI &
Associate
Banks
F cal > F tab
2.47 > 2.34
H : Rejected
There is
significant
difference in HF
ratio in all
selected PSBs
during the study
period.
Other
Nationalized
Banks 19.467 > 2.10
Education
Loan (EL)
Ratio
SBI &
Associate
Banks
F cal < F tab
0.177 < 2.34
H : Accepted
There is no
significant
difference in EL
ratio in all
selected PSBs
during the study
period.
Other
Nationalized
Banks 0.511 < 2.10
Conclusion :
The analysis reveals that,
i) There is significant difference in total Agriculture Advances Ratio, Indirect
Agriculture Advances Ratio and MSE Advances Ratio in case of selected
other Nationalized Banks. i.e. it can be concluded that distribution of Total
Agriculture, Indirect Agriculture and MSE advances vary significantly in
other Nationalized Banks during the study period.
ii) There is significant difference in total Priority Sector Lending Ratio and
Housing Finance Ratio in all selected 26 Public Sector Banks (PSBs). i.e.
distribution of these advances vary significantly in all selected PSBs during
the study period.
308
iii) As regards to Direct Agriculture Advances Ratio, Weaker Section
Advances Ratio and Education Loan Ratio, difference is not significant in
all selected Public Sector Banks (PSBs). Therefore it may be concluded
that distribution of these advances do not vary significantly in all selected
PSBs during the study period.
iv) Overall analysis shows that in case of other Nationalized Banks, all ratios
are significantly different, except Direct Agri Advances Ratio, Weaker
Section Ratio and Education Loan Ratio. It can be concluded that in other
Nationalized Banks distribution of advances to majority of priority sector
varies significantly during the study period.
v) In case of SBI & Associate Banks, the study reveals that total Priority
Sector Lending Ratio and Housing Finance Ratio show significant
difference i.e. we can conclude that distribution of total priority sector
lending and housing finance vary significantly in SBI & Associate Banks
during the study period.
vi) The analysis reveals that in all selected PSBs, the distribution of lending to
selected priority sectors does not follow the similar pattern in each bank
group during the study period.
6.3(c) for Impact of selected Priority Sector Lending Ratios upon
selected Financial Ratios – Bank Wise
Bank wise analysis of impact of selected priority sector ratios (viz.
total PSL, Agri, MSE, WS, HF and EL ratios) upon selected financial ratios
(viz.NP, ROA, ROE and NPA ratios) of selected 26 public sector banks
during the study period. Karl Pearson‘s Correlation coefficient is
calculated with the help of SPSS software to know the nature and degree of
relationship and whether the relationship is significant or not is tested at 5%
and 1% levels with the help of Test for Significance. The analysis reveals
the following results.
309
6.3(c)(i) Impact of total Priority Sector Lending upon selected
Financial Ratios :
Figure No. 6.2
Impact of total PSL on Financial Ratios of selected PSBs (%)
As regards impact of total PSL on Net Profit, in case of 10 banks