[amp_mcq option1=”50%” option2=”60%” option3=”75%” option4=”80%” correct=”option2″]
The correct answer is: B. 60%
As per RBI guidelines, Regional Rural Banks (RRBs) have to provide a minimum of 60% of their total credit under priority sector lending. Priority sector lending refers to lending to certain sectors of the economy that are considered to be important for the country’s development. These sectors include agriculture, small and medium enterprises, education, housing, and social infrastructure.
The RBI has set this target for RRBs in order to ensure that these banks are lending to sectors that are important for the country’s development. RRBs are rural banks that are set up by the government in partnership with commercial banks. They are designed to provide banking services to the rural population, who are often underserved by commercial banks.
The RBI’s target of 60% for priority sector lending is higher than the target for commercial banks, which is 40%. This is because RRBs are expected to play a greater role in lending to the rural sector.
The RBI monitors the performance of RRBs in meeting the priority sector lending target. If an RRB does not meet the target, it may be subject to penalties.
The priority sector lending target is an important tool for the RBI to ensure that banks are lending to sectors that are important for the country’s development. The target helps to ensure that credit is available to the sectors that need it most.
Here is a brief explanation of each option:
- Option A: 50%. This is the minimum target for priority sector lending for commercial banks. RRBs are expected to lend a higher proportion of their total credit to the priority sector.
- Option B: 60%. This is the correct answer. RRBs have to provide a minimum of 60% of their total credit under priority sector lending.
- Option C: 75%. This is a higher proportion than the target for RRBs.
- Option D: 80%. This is the maximum target for priority sector lending for commercial banks. RRBs are expected to lend a higher proportion of their total credit to the priority sector.