Received: 18.03.2021; Revised: 22.04.2021, Accepted: 11.05.2021, Published Online: 30.06.2021

Dr. Ruchi Sharma

Project Director, ICSSR IMPRESS, PG Deptt. Of Economics, Goswami Ganesh Dutta Sanatan Dharam College, Chandigarh


Commercial banks are capable of mobilizing thesavings and facilitating their investment.The pooled savings are distributed to different sectors of the economy to enhance the productivity of the nation.Commercial banks can play a vital role in balanced development of the economy by transferring the surplus funds from more developed region to less developed ones.But despite the tremendous progress made by the commercial banks since independence, there are vast inter regional disparities in the development of commercial banks in India.Various indicators based on three broad parameters of Branch expansion,deposit mobilization and credit deployment have been used to study the inter-state disparities for the period 2011-2018.The composite index has been formulated using Principal Component Analysis on the basis of selected indicators. The states and Union territories have been ranked on the basis of composite indices. A large number of Indian states and union territories are in the low banked category. Increased access to financial products and services needs to be ensured to achieve balanced growth of the economy. To reduce regional disparities, a sufficient inflow of funds apart from several other policy measures is required. The target of reducing disparities has not been achieved despite several policy measures taken by the government from time to time.To reduce regional disparities in banking services, financial literacy is required to create awareness about the products offered by commercial banks. The commercial banks’ regions can bring the neglected regions intothe economic mainstream by ensuring increased access, and usage of banking services in these regions.This can go a long way in reducing interstate disparities in the country.

Keywords: Commercial Banking Development, Inter State Disparities, Branch expansion, deposit mobilization, credit deployment.