J&K Govt pulls up banks over weak priority sector lending, directs ACP recast

Srinagar, Jan 11: The Jammu and Kashmir government has pulled up banks operating in the Union Territory over weak performance in Priority Sector lending and directed a recast of the Annual Credit Plan (ACP), as per the minutes of the 17th meeting of the UT Level Bankers’ Committee (UTLBC).

According to the minutes, the Principal Secretary, Finance, observed that the existing ACP target of Rs 63,679 crore for the current financial year was lower than the previous year’s credit achievement of Rs 69,777 crore, which required fine-tuning.

He noted that improvement in credit off-take and the Credit–Deposit ratio could only be achieved by setting realistic credit targets and accordingly directed that the ACP be revisited and realigned at Rs 77,000 crore for both Priority and Non-Priority Sector lending.

As informed to the House, banks in J&K have disbursed an aggregate credit of Rs 43,016.93 crore to 10.07 lakh beneficiaries during the first half of FY 2025–26, against the ACP target of Rs 63,679.13 crore for 17.61 lakh beneficiaries, achieving 68 per cent in financial terms and 57 per cent in physical terms.

The minutes further recorded that during the corresponding period of the previous financial year, banks had disbursed Rs 35,018.92 crore to 9.27 lakh beneficiaries, reflecting a year-on-year growth of 23 per cent in financial terms. During the first quarter ending June 30, 2025, banks disbursed Rs 21,606.05 crore to 5.27 lakh beneficiaries. The progress was considered satisfactory.

However, a sector-wise review, as per the minutes, showed notable imbalance in lending. Against a Priority Sector target of Rs 43,312.17 crore, banks disbursed Rs 22,428.93 crore, achieving only 52 per cent of the target. In contrast, Non-Priority Sector lending stood at Rs 20,588 crore against a target of Rs 20,366.96 crore, registering a 101 per cent achievement.

The minutes noted serious underperformance in Priority Sector sub-sectors. Except for Agriculture MSME, Renewable Energy and Others, banks failed to achieve targets in Education (15 per cent), Housing (25 per cent) and Social Infrastructure (0.34 per cent).

As per the minutes, the Chief Secretary urged banks to improve lending under the Priority Sector with special emphasis on Agriculture, Housing, Education and Social Infrastructure, stating that these sectors are critical for the overall growth of the Union Territory. He also exhorted banks and sponsoring agencies to work in tandem to achieve sub-sectoral targets during the remaining period of the current financial year.

The meeting also reviewed bank-wise performance, with the minutes recording that Public Sector Banks achieved only 23 per cent of physical targets and 33 per cent of financial targets, while private sector banks achieved 60 per cent and 65 per cent, Regional Rural Banks 59 per cent and 30 per cent, and cooperative banks 3 per cent and 4 per cent, respectively.

Taking serious note of the subdued performance, particularly of Public Sector and Cooperative Banks, the Chief Secretary, as recorded in the minutes, said that poorly performing banks adversely impact the overall banking performance in the Union Territory and called for serious introspection to improve credit dispensation during the remaining months of the financial year.