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Before financial reforms, the banking sector was characterized by all of the following features except.
- a)High revenue requirements
- b)Quantitative credit restrictions
- c)Administered interest rate structure
- d)Keeping very less lendable resources for the priority sector
Correct answer is option 'D'. Can you explain this answer?
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Before financial reforms, the banking sector was characterized by all ...
Quantitative credit restrictions:
Before financial reforms, the banking sector was characterized by quantitative credit restrictions imposed by the government. These restrictions limited the amount of credit that banks could extend to borrowers, leading to a lack of access to financing for many individuals and businesses.
Administered interest rate structure:
Another feature of the banking sector before financial reforms was an administered interest rate structure. This means that interest rates on loans and deposits were set by the government or central bank, rather than being determined by market forces. This often led to inefficiencies in the allocation of credit and resources.
High revenue requirements:
Banks were required to meet high revenue targets set by the government before financial reforms. This put pressure on banks to generate profits through traditional banking activities, rather than focusing on meeting the needs of customers or improving efficiency.
Keeping very less lendable resources for the priority sector:
One feature that was not characteristic of the banking sector before financial reforms was keeping very less lendable resources for the priority sector. In fact, banks were often required to allocate a certain percentage of their funds towards priority sectors such as agriculture, small-scale industries, and exports. This was done to ensure that these sectors received adequate credit to support their growth and development.
Before financial reforms, the banking sector was characterized by quantitative credit restrictions imposed by the government. These restrictions limited the amount of credit that banks could extend to borrowers, leading to a lack of access to financing for many individuals and businesses.
Administered interest rate structure:
Another feature of the banking sector before financial reforms was an administered interest rate structure. This means that interest rates on loans and deposits were set by the government or central bank, rather than being determined by market forces. This often led to inefficiencies in the allocation of credit and resources.
High revenue requirements:
Banks were required to meet high revenue targets set by the government before financial reforms. This put pressure on banks to generate profits through traditional banking activities, rather than focusing on meeting the needs of customers or improving efficiency.
Keeping very less lendable resources for the priority sector:
One feature that was not characteristic of the banking sector before financial reforms was keeping very less lendable resources for the priority sector. In fact, banks were often required to allocate a certain percentage of their funds towards priority sectors such as agriculture, small-scale industries, and exports. This was done to ensure that these sectors received adequate credit to support their growth and development.
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Before financial reforms, the banking sector was characterized by all of the following features except.a)High revenue requirementsb)Quantitative credit restrictionsc)Administered interest rate structured)Keeping very less lendable resources for the priority sectorCorrect answer is option 'D'. Can you explain this answer?
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