Banking support and SMEs development in Uttarakhand: A comparative study of public and private sector banks

Abstract

Small and Medium Enterprises (SMEs) serve as the backbone of economic growth, driving innovation, employment, and regional development, while formal banking sectors act as the primary engines fueling this growth through essential financial credit. This study presents a comparative analysis of public and private sector banks in terms of their banking support and its subsequent impact on SME development in Uttarakhand, India. The research adopts a purely secondary data-driven empirical approach, analyzing a longitudinal dataset extracted from the Reserve Bank of India (RBI) reports, State Level Bankers’ Committee (SLBC) statistics, and ministry publications over a specific temporal framework. The data is evaluated using trend analysis and comparative statistical tools to measure indicators such as credit-deposit ratios, priority sector lending allocations, and non-performing assets (NPAs). The empirical findings reveal distinct operational contrasts: public sector banks serve as the backbone of financial inclusion in remote, mountainous terrains, maintaining a wider branch network and higher credit volume despite facing operational bottlenecks. Conversely, private sector banks demonstrate superior efficiency in credit deployment and technological infrastructure, though their credit footprint remains heavily concentrated in industrialized plains. Ultimately, this paper bridges a vital research gap by examining macro-level banking performance against the backdrop of a distinct regional economy. The insights offer an actionable roadmap for financial institutions and regional policymakers to optimize institutional credit mechanisms and foster resilient SME ecosystems in emerging hill economies.