Name: Sushila, Anand Kumar
Country: India

Year: 2025
Volume: Volume-12, Issue-1 (Jan-June)
Page Number: 236-243
DOI: https://doi.org/10.5281/zenodo.21256106

The banking sector is a key driver of economic growth by providing credit to various sectors of the economy, including agriculture, industry, services, and retail. Sectoral credit growth facilitates investment, employment generation, and overall economic development. However, excessive or inadequately monitored credit expansion may lead to an increase in loan defaults, resulting in the accumulation of Non-Performing Assets (NPAs), which adversely affect banks’ profitability, liquidity, and financial stability. In recent years, the Indian banking sector has experienced fluctuations in both credit growth and asset quality, making it important to examine the relationship between sector-wise lending and NPAs. Examining how various sectors contribute to non-performing assets (NPA) is crucial because not every priority sector and sub-sector carries the same level of risk. This study focuses on the impact of sector-specific lending on non-performing assets (NPAs) in the priority sector. The researcher had examined the BANKEX constituents for four years (2020-2024). Statistical techniques such as descriptive statistics, correlation analysis, and multiple regression is used in data analysis. In the study it was found that agricultural lending, industrial lending, and personal lending all have a positive correlation to non-performing assets (NPA) in priority sectors, but service sector lending has a negative correlation to NPA. Industrial and service sector lending results are statistically significant. The study will provide useful insights for banks and policymakers in formulating prudent credit allocation strategies and improving the overall stability of the banking sector.