An Inter-State Analysis of Commercial Banking Development in Rural India

Abstract

Commercial banks may significantly contribute to the equitable development of the economy by reallocating excess capital from more developed regions to less developed areas.Despite the significant advancements achieved by commercial banks since independence, substantial inter-regional discrepancies persist in the growth of commercial banks in India. The analysis of branch growth, deposit mobilisation, and credit deployment has been used to examine interstate differences from 1981 to 2018.The composite index has been developed using Principal Component Analysis based on specified indicators. The states and Union territories have been rated according to composite indexes. A significant number of Indian states and union territories fall inside the low-banked category. Ensuring enhanced access to financial goods and services is essential for achieving equitable economic development. Adequate financial input, with other policy initiatives, is necessary to mitigate regional inequities.