The banking sector should be allowed to grow its balance sheets, and do business with reference to the bottom lines. This appears strange, since paradoxically, priority sector loans have contributed far less to the gross non-performing assets (NPAs) of all three categories of banks than non-priority sector loans. In fact, public sector banks had a large proportion of NPAs among their priority sector loans (50%) in 2012, a figure that had come down to 24.1% in 2017. Non-priority sector loans contributed to 82% of NPAs in the case of private sector banks in 2017, against the 18% of NPAs in the case of priority sector loans. Foreign banks had a comparable figure for NPAs within their non-priority loans. Thus, priority sector lending may not be responsible for compromising banks' credit risk minimization strategies, or risk accumulation. Yet, most bankers seem reluctant to lend to the priority sectors. An informal chat with bankers reveals that the problem with priority sector
http://dovno.com/time-to-do-away-with-priority-lending-norms/