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Abstract
The priority sector lending mainly intends to ensure that the assistance from the banking system to those sectors of the economy that has not received adequate support of institutional finance. The attainment of the socio-economic priorities of the government like the growth of agriculture, promotion of small entrepreneurs and development of the backward area, etc. are the major responsibilities and challenges of commercial banks. Since the seventies, Reserve Bank of India and the Government of India have stipulated guidelines for priority sector lending by banks. Conventionally, the objective of PSL has been to ensure that vulnerable sections of society get access to credit and there is an adequate flow of resources to those segments of the economy which have higher employment potential and help in making, an impact on poverty alleviation. However, over the last four decades, the Indian economy has not only undergone a structural transformation but has also been increasingly integrated into the global economy, resulting into a shift of national priorities from lending to vulnerable sections to increase employability, create basic infrastructure and improve the competitiveness of the economy, thus creating more jobs.