Srinagar, Sep 6: Jammu and Kashmir’s banking system crossed its overall priority-sector lending target in 2025-26, but a closer look at the official figures reveals a far less reassuring picture: several banks delivered less than half of the credit they were expected to provide to priority sectors, while lending to education, housing and social infrastructure fell substantially short of targets.
According to official data accessed by Greater Kashmir, priority-sector lending, in simple terms, means bank credit that the government and the Reserve Bank of India want to ensure reaches parts of the economy that may otherwise struggle to get adequate financing — such as farmers, small businesses, students, homebuyers and certain infrastructure projects.
The RBI framework specifically covers agriculture, MSMEs, education, housing, social infrastructure, renewable energy and other identified categories. On the surface, J&K appears to have performed well. Banks disbursed Rs 44,228.30 crore to priority sectors against a target of Rs 43,812.17 crore, achieving 101 percent.
But that aggregate figure conceals substantial gaps. IndusInd Bank achieved only 9 percent of its target, followed by Federal Bank at 13 percent, Indian Overseas Bank at 18 percent, IDBI Bank at 26 percent and Punjab and Sind Bank at 30 percent. Central Bank of India achieved 34 percent, SBI 46 percent, Yes Bank 50 percent, South Indian Bank 55 percent, and J&K Grameen Bank 57 percent. Axis Bank achieved 68 percent, Canara Bank 70 percent, Bank of Baroda 73 percent, PNB 82 percent, and Bank of India 95 percent.
The official record shows that the problem is not confined to individual banks. Some of the sectors for which priority lending is intended are also substantially underfunded. Agriculture achieved 84 percent of its target, housing 53 percent and education just 31 percent.
Social infrastructure was the weakest, with only 5 percent of the targeted lending achieved. The figures assume greater significance because the Chief Secretary himself raised concerns over the pattern.
Taking “serious note” of the unsatisfactory performance of several public and private sector banks, the Chief Secretary, AtalDulloo, during a UTBLC meeting observed that “the challenge lies more in intent than in capacity” and urged banks to adopt a more proactive approach towards priority-sector lending by treating it as a viable business opportunity.
He also expressed concern over the poor performance in education and housing finance and directed banks to analyse the constraints and introduce more competitive products and pricing to improve credit flow.
The data also reveal a concentration of priority-sector lending among a few banks. J&K Bank accounted for 63.41 percent of total priority-sector credit disbursed in the UT despite having 38 percent of the branch network.
HDFC Bank accounted for 12 percent of priority-sector lending against a 5 percent share of branches.
The official review noted that several other banks had a much smaller share of priority-sector lending compared with their presence through branches.
The district-level picture is similarly uneven. Udhampur recorded only 73 percent achievement, followed by Bandipora at 80 percent, Shopian and Reasi at 82 percent each, Baramulla at 83 percent, Pulwama at 84 percent, Kulgam at 85 percent, Poonch at 86 percent, Rajouri at 89 percent, and Anantnag at 90 percent.
Doda and Ramban achieved 93 percent each, while Samba reached 94 percent. Agriculture received particular attention during the review. The Chief Secretary described it as a “major economic lever” for the region and called for greater bank lending to the sector. He appreciated J&K Bank’s performance in agricultural term loans while asking other banks to emulate it. There is also a financial consequence for banks that fall short of mandated priority-sector targets.
The meeting was informed that commercial banks with shortfalls are required to contribute an equivalent amount to designated developmental funds, including NABARD’s Rural Infrastructure Development Fund, which earns comparatively low returns.
The overall credit numbers therefore tell only part of the story.
Banks disbursed Rs 84,384.12 crore across priority and non-priority sectors during 2025-26, exceeding the overall Annual Credit Plan target of Rs 77,974.29 crore.
Yet within priority lending, the official data point to a much deeper problem: the system met the aggregate target while several banks and critical sectors remained significantly below their expected targets.
Jammu and Kashmir’s banking sector recorded 9.85 percent year-on-year growth in total banking business during the financial year ended March 2026, with deposits and advances both growing by nearly 10 percent. However, J&K’s credit-deposit (CD) ratio remained almost unchanged during the year, increasing by just 0.01 percentage point from 61.14 percent as on March 31, 2025, to 61.15 percent as on March 31, 2026.
