Bank Profitability and Priority Sector Lending-From Populism to Impressionism

The curtailment of the target of priority sector lending to 10 per cent, as urged by the Committee on the Financial System, will send an unfortunate signal to the dispensers of credit that the basic objective for which priority sector lending was developed two decades ago is being diluted. Policy-makers in developing countries will from time to time find that they have to reconcile conflicting objectives, but they cannot afford to let crucial economic agents, such as banks and financial institutions, choose the easy way out of such situations.