Credit Expansion Shows Growth, But Regional Rural Banks and Priority Sectors Raise Concerns in Tripura

By Our Correspondent

Agartala, May 25, 2026

The latest data presented in the 154th State Level Bankers’ Committee (SLBC) meeting convened by Punjab National Bank, the convener bank for Tripura, reflects a mixed picture of credit expansion in the state during FY 2025-26. While overall banking credit has grown substantially compared to the previous financial year, several worrying trends continue to expose structural weaknesses in priority sector lending, particularly among Regional Rural Banks (RRBs) and private banks.

According to the SLBC agenda notes, the Grand Total Annual Credit Plan (ACP) achievement of Public Sector Banks (PSBs) rose sharply from Rs. 2,72,190.95 lakh in September 2024 to Rs. 3,88,214.73 lakh in September 2025, registering a robust 43 percent year-on-year growth. Cooperative banks and RRBs also recorded growth of 16 percent and 21 percent respectively, while private banks managed only 10 percent growth despite having significantly larger targets.

However, the impressive figures hide deeper concerns regarding the actual fulfilment of developmental banking objectives in Tripura. Agriculture, which remains the backbone of the rural economy, continues to witness poor achievement percentages across almost all banking categories. PSBs achieved only 36 percent of their agricultural target in FY 2025-26 compared to 39 percent in the previous year. Private banks stagnated at 35 percent achievement despite increasing targets, reflecting a lack of serious commitment toward farmers and allied rural activities.

Although RRBs showed some improvement in agriculture lending with achievement rising from 35 percent to 38 percent, their overall performance in Total Priority Sector lending declined from 36 percent to 33 percent. This is particularly alarming because RRBs are specifically meant to strengthen rural credit delivery and support weaker sections. A decline in their priority sector performance raises questions over institutional efficiency and monitoring mechanisms.

Another disturbing trend emerged in the “Other Priority Sector” category. Private banks witnessed a dramatic fall in achievement percentage from an extraordinary 184 percent in FY 2024-25 to just 27 percent in FY 2025-26, alongside a negative year-on-year growth of 43 percent. Similarly, RRBs recorded a 38 percent negative growth in this segment. Such fluctuations indicate inconsistency in credit planning and implementation.

The MSME sector, however, provided some encouraging signs. PSBs improved their MSME achievement from 55 percent to 61 percent, while private banks increased it from 73 percent to 76 percent. RRBs also improved considerably from 22 percent to 35 percent. This reflects growing institutional confidence in small businesses and entrepreneurship, which is crucial for Tripura’s employment generation.

Yet, the contrast between priority and non-priority sector lending remains striking. PSBs achieved 65 percent in non-priority sector lending compared to only 56 percent in total priority sector lending. Private banks achieved only 39 percent in non-priority lending but continued to remain below expectations in agriculture and rural sectors. The Experts including Kiran Bhowmik, PhD Scholar in the Department of Economics and Research Associate under study of the Sixteen Finance Commission, Government of India have said that this imbalance suggests that banks still prefer relatively safer and commercially profitable loans rather than socially essential sectors.

more news...