Trends in allocation of funds by lead bank to the priority and non-priority sectors in Dharwad andBelagavi districts

Abstract

The banking sector plays an important and active role in the economic development of a nation. The contributionof banks to Indian economic growth through priority sector lending is remarkable. As of March 2020, a total of 717 districtscovered by 18 public sector banks and one private sector bank took the responsibility of a lead bank in India. This presentstudy aims to analyses the trends in fund allocation by lead bank to priority sector and non-priority sectors in Dharwad andBelagavi districts using secondary data collected for a period of 15 years (2004-05 to 2018-19). Collected data wereprocessed and analyzed using Kruskal Wallis H-Test and Compound annual growth rate (CAGR) technique. Results of theKruskal Wallis H-Test showed a significant difference between the performance of various financial institutions (H>5.99)in respect of allocation of funds to priority and non-priority sectors in Dharwad and Belagavi districts, but only theagriculture sector of Dharwad district showed as no significant difference (H value 4.81). Results of CAGR shows that inboth the study districts other priority sectors were growing with a high growth rate i.e., 45.65 and 40.55 per cent per annumin Dharwad and Belagavi districts respectively. The growth rate in funds allocation to the education sector was found to belowest (5.72 % per annum) in Dharwad district when compared to Belagavi district 10.19% per annum)