Determinants of Priority Sector Lending (PSL) by Banks in  West Bengal

Atanu Mitra; Sebak Kumar Jana

doi:10.55524/ijirem.2026.13.3.7

Abstract

Priority Sector Lending (PSL) is a core policy tool for advancing the development of inclusive finance, and ensuring that underserved sectors such as agriculture and micro, small, and medium-sized enterprises (MSMEs) receive sufficient credit supply. This study takes banks in West Bengal, India as its research subject, uses cross-sectional data of 41 banks from 2019, and conducts analysis through an ordinary least squares (OLS) regression model. It sets the total volume of PSL disbursement as the dependent variable, and adopts bank ownership, number of PSL accounts, size of deposits and loans, and loan-to-deposit ratio as explanatory variables. The study finds that the three types of banks—public sector banks, private sector banks, and cooperative banks—show significantly different PSL performance. Three factors including the status of being a public sector bank have a statistically significant positive impact on PSL disbursement, while all other variables produce no significant effect. Finally, the study puts forward policy recommendations to expand service coverage and strengthen institutional capacity, so as to raise the local supply level of inclusive credit.

Keywords

Priority Sector Lending, Financial Inclusion, Public Sector Banks, Credit Allocation, West Bengal, Banking Sector.

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Cites this article as

A. Mitra, S. K. Jana, "Determinants of Priority Sector Lending (PSL) by Banks in West Bengal", International Journal of Innovative Research in Engineering and Management (IJIREM), Vol-13, Issue-3, Page No-56-61, 2026. Available from: https://doi.org/10.55524/ijirem.2026.13.3.7