RURAL CREDIT AND RURAL DEVELOPMENT IN INDIA: A COMPARATIVE ANALYSIS OF PUBLIC AND PRIVATE SECTOR BANKS
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Kadi Sarva Vishwavidyalaya
Kadi Sarva Vishwavidyalaya
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Abstract
Rural credit is one of the most important tools for rural development in India, since it allows farmers, small entrepreneurs, and rural households to invest in agriculture, allied activities, and small business. Since the nationalisation of banks in 1969, public sector banks have carried most of the responsibility of taking formal credit to rural India, while private sector banks have entered this space more actively only in the last two decades. This paper presents a comparative analysis of the role played by public sector banks and private sector banks in rural credit delivery and rural development in India. Using secondary data drawn from the Reserve Bank of India (RBI), the National Bank for Agriculture and Rural Development (NABARD), the Ministry of Finance, and published academic studies, the paper compares the two categories of banks on four dimensions: growth in agricultural and priority sector credit, rural branch expansion, performance in flagship financial inclusion schemes such as the Pradhan Mantri Jan Dhan Yojana (PMJDY) and the Kisan Credit Card (KCC), and the quality of rural/agricultural loan assets. The analysis finds that public sector banks still dominate in the sheer volume of rural credit and branch presence, while private sector banks have grown faster in percentage terms and generally show better asset quality. The paper concludes that a coordinated approach, in which public sector banks continue to anchor financial inclusion and private sector banks contribute efficiency and technology, is best suited to accelerating rural development in India.
Keywords
rural credit rural development public sector banks private sector banks priority sector lending financial inclusion India
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Double-Blind Peer Review
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CC BY-NC 4.0
Volume/Issue:
Volume 02, Issue 10
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2
Article Type:
Research Article
Publication Date:
Oct 14 2026
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Brahman, B. S. (2026). Rural Credit and Rural Development in India: A Comparative Analysis of Public and Private Sector Banks. International Journal of Science, Strategic Management and Technology, 02(10), 1-9. https://doi.org/10.55041/ijsmt.v2i10.069
Brahman, Beena. "Rural Credit and Rural Development in India: A Comparative Analysis of Public and Private Sector Banks." International Journal of Science, Strategic Management and Technology, vol. 02, no. 10, 2026, pp. 1-9. doi:https://doi.org/10.55041/ijsmt.v2i10.069.
Brahman, Beena. "Rural Credit and Rural Development in India: A Comparative Analysis of Public and Private Sector Banks." International Journal of Science, Strategic Management and Technology 02, no. 10 (2026): 1-9. https://doi.org/https://doi.org/10.55041/ijsmt.v2i10.069.
References
Business Standard. (2021, March 31). Under Modi regime, private banks outnumber PSBs on new rural branches. Business Standard. https://www.business-standard.com/article/finance/private-banks-outnumber-psbs-in-rural-penetration-under-modi-rule-121033100532_1.html
Business Standard. (2025, May 30). Operative KCCs dipped 2.7% in FY25; loans hit Rs 6 trillion, shows data. Business Standard. https://www.business-standard.com/industry/agriculture/operative-kccs-dipped-2-7-in-fy25-loans-hit-rs-6-trillion-shows-data-125053000021_1.html
Chavan, P., & Kamra, A. (2022). Financial inclusion in rural India: An assessment based on secondary data. Review of Agrarian Studies, 12(1). https://ras.org.in/articles/289/text/article.html
National Bank for Agriculture and Rural Development. (2025). Trends and patterns in agriculture credit in India. NABARD. https://www.nabard.org/auth/writereaddata/tender/2501235626trends-and-patterns-in-agriculture-credit-in-india.pdf
Press Information Bureau. (2025a, August). Pradhan Mantri Jan Dhan Yojana (PMJDY) — National Mission for Financial Inclusion — completes 11 years of transformative impact. Ministry of Finance, Government of India. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2161401
Press Information Bureau. (2025b, December). Gross NPAs of Scheduled Commercial Banks (SCBs) for domestic operations reach a historic low of 2.15% as of September, 2025. Government of India. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2225442
Reserve Bank of India. (2025). Master direction – Reserve Bank of India (Priority Sector Lending – Targets and Classification) Directions, 2025 (RBI/FIDD/2024-25/128). https://www.fidcindia.org.in/wp-content/uploads/2025/03/RBI-PSL-MASTER-DIRECTIONS-24-03-25.pdf
Swarajya. (2024). Banks' gross non-performing assets hit 13-year low; agriculture sector reports highest GNPA, retail loans lowest: RBI. Swarajya Magazine. https://swarajyamag.com/news-brief/banks-gross-non-performing-assets-hit-13-year-low-agriculture-sector-reports-highest-gnpa-retail-loans-lowest-rbi
Thilagam, M., & Ibram, M. S. (2025). A comparative study of priority sector lending by the regional rural banks and commercial banks in India. International Journal of Creative Research Thoughts, 13(10). https://www.ijcrt.org/papers/IJCRT2510792.pdf
Business Standard. (2025, May 30). Operative KCCs dipped 2.7% in FY25; loans hit Rs 6 trillion, shows data. Business Standard. https://www.business-standard.com/industry/agriculture/operative-kccs-dipped-2-7-in-fy25-loans-hit-rs-6-trillion-shows-data-125053000021_1.html
Chavan, P., & Kamra, A. (2022). Financial inclusion in rural India: An assessment based on secondary data. Review of Agrarian Studies, 12(1). https://ras.org.in/articles/289/text/article.html
National Bank for Agriculture and Rural Development. (2025). Trends and patterns in agriculture credit in India. NABARD. https://www.nabard.org/auth/writereaddata/tender/2501235626trends-and-patterns-in-agriculture-credit-in-india.pdf
Press Information Bureau. (2025a, August). Pradhan Mantri Jan Dhan Yojana (PMJDY) — National Mission for Financial Inclusion — completes 11 years of transformative impact. Ministry of Finance, Government of India. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2161401
Press Information Bureau. (2025b, December). Gross NPAs of Scheduled Commercial Banks (SCBs) for domestic operations reach a historic low of 2.15% as of September, 2025. Government of India. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2225442
Reserve Bank of India. (2025). Master direction – Reserve Bank of India (Priority Sector Lending – Targets and Classification) Directions, 2025 (RBI/FIDD/2024-25/128). https://www.fidcindia.org.in/wp-content/uploads/2025/03/RBI-PSL-MASTER-DIRECTIONS-24-03-25.pdf
Swarajya. (2024). Banks' gross non-performing assets hit 13-year low; agriculture sector reports highest GNPA, retail loans lowest: RBI. Swarajya Magazine. https://swarajyamag.com/news-brief/banks-gross-non-performing-assets-hit-13-year-low-agriculture-sector-reports-highest-gnpa-retail-loans-lowest-rbi
Thilagam, M., & Ibram, M. S. (2025). A comparative study of priority sector lending by the regional rural banks and commercial banks in India. International Journal of Creative Research Thoughts, 13(10). https://www.ijcrt.org/papers/IJCRT2510792.pdf
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