The profitability of public sector banks is low due to 1. Over-cautions approach to lending 2. Reserve Bank policies 3. High overhead costs 4. Social sector lending

The correct answer is: Both 1 and 4.

Public sector banks (PSBs) are banks that are owned by the government. They are the largest banks in India, and they account for a majority of the country’s banking assets. PSBs have been struggling with profitability in recent years. There are a number of reasons for this, including:

• Over-cautious approach to lending: PSBs have been reluctant to lend money, especially to small businesses. This is because they are more risk-averse than private sector banks. They are also under pressure from the government to keep lending rates low, which makes it difficult for them to make a profit.
• Reserve Bank policies: The Reserve Bank of India (RBI) is the central bank of India. It sets the interest rates that banks charge on loans and deposits. The RBI has been raising interest rates in recent years in an effort to control inflation. This has made it more expensive for PSBs to borrow money, which has hurt their profitability.
• High overhead costs: PSBs have high overhead costs, which means that they spend a lot of money on things like salaries, rent, and marketing. This makes it difficult for them to make a profit.
• Social sector lending: PSBs are required to lend a certain amount of money to the social sector, which includes things like education and healthcare. This lending is often unprofitable, which hurts the profitability of PSBs.

In conclusion, the profitability of PSBs is low due to a number of factors, including over-cautious lending, Reserve Bank policies, high overhead costs, and social sector lending.