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In 2001, RBI issued a set of guidelines for private sector. Which of the following is true?
- a)NBFCs with minimum CAR of 12% and with good track record will be allowed to open private banks
- b)New banks have to open minimum 25% of branches in rural and semi-urban areas
- c)They have to provide minimum 40%of loans to priority sector
- d)All the above
Correct answer is option 'D'. Can you explain this answer?
Verified Answer
In 2001, RBI issued a set of guidelines for private sector. Which of t...
New banks are supposed to keep minimum 10% of CAR from the beginning.
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In 2001, RBI issued a set of guidelines for private sector. Which of t...
Introduction:
In 2001, the Reserve Bank of India (RBI) issued a set of guidelines for the private sector. These guidelines aimed to establish certain criteria and requirements for the opening and operation of private banks in the country. Let's examine each option to determine which one is true.
Option A:
NBFCs with a minimum Capital Adequacy Ratio (CAR) of 12% and a good track record will be allowed to open private banks.
Explanation:
The Capital Adequacy Ratio (CAR) is a measure of a bank's capital in relation to its risk-weighted assets. Option A states that Non-Banking Financial Companies (NBFCs) with a minimum CAR of 12% and a good track record will be allowed to open private banks. This means that if an NBFC meets these criteria, it will be eligible to set up a new private bank.
Option B:
New banks have to open a minimum of 25% of branches in rural and semi-urban areas.
Explanation:
Option B states that new banks are required to open a minimum of 25% of their branches in rural and semi-urban areas. This guideline is in line with the RBI's objective of promoting financial inclusion and ensuring that banking services reach underserved areas of the country.
Option C:
They have to provide a minimum of 40% of loans to the priority sector.
Explanation:
Option C states that new banks are required to provide a minimum of 40% of their loans to the priority sector. The priority sector includes sectors such as agriculture, micro, small and medium enterprises (MSMEs), education, housing, and export credit. This requirement ensures that the new banks contribute to the development of these sectors, which are crucial for the overall economic growth of the country.
Conclusion:
Based on the given options, it can be concluded that all of the above options (A, B, and C) are true. The RBI's guidelines for the private sector in 2001 included allowing NBFCs with a minimum CAR of 12% and a good track record to open private banks, requiring new banks to open a minimum of 25% of branches in rural and semi-urban areas, and mandating a minimum of 40% of loans to be provided to the priority sector. These guidelines aimed to promote financial inclusion and support the development of key sectors in the country.
In 2001, the Reserve Bank of India (RBI) issued a set of guidelines for the private sector. These guidelines aimed to establish certain criteria and requirements for the opening and operation of private banks in the country. Let's examine each option to determine which one is true.
Option A:
NBFCs with a minimum Capital Adequacy Ratio (CAR) of 12% and a good track record will be allowed to open private banks.
Explanation:
The Capital Adequacy Ratio (CAR) is a measure of a bank's capital in relation to its risk-weighted assets. Option A states that Non-Banking Financial Companies (NBFCs) with a minimum CAR of 12% and a good track record will be allowed to open private banks. This means that if an NBFC meets these criteria, it will be eligible to set up a new private bank.
Option B:
New banks have to open a minimum of 25% of branches in rural and semi-urban areas.
Explanation:
Option B states that new banks are required to open a minimum of 25% of their branches in rural and semi-urban areas. This guideline is in line with the RBI's objective of promoting financial inclusion and ensuring that banking services reach underserved areas of the country.
Option C:
They have to provide a minimum of 40% of loans to the priority sector.
Explanation:
Option C states that new banks are required to provide a minimum of 40% of their loans to the priority sector. The priority sector includes sectors such as agriculture, micro, small and medium enterprises (MSMEs), education, housing, and export credit. This requirement ensures that the new banks contribute to the development of these sectors, which are crucial for the overall economic growth of the country.
Conclusion:
Based on the given options, it can be concluded that all of the above options (A, B, and C) are true. The RBI's guidelines for the private sector in 2001 included allowing NBFCs with a minimum CAR of 12% and a good track record to open private banks, requiring new banks to open a minimum of 25% of branches in rural and semi-urban areas, and mandating a minimum of 40% of loans to be provided to the priority sector. These guidelines aimed to promote financial inclusion and support the development of key sectors in the country.
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In 2001, RBI issued a set of guidelines for private sector. Which of the following is true?a)NBFCs with minimum CAR of 12% and with good track record will be allowed to open private banksb)New banks have to open minimum 25% of branches in rural and semi-urban areasc)They have to provide minimum 40%of loans to priority sectord)All the aboveCorrect answer is option 'D'. Can you explain this answer?
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In 2001, RBI issued a set of guidelines for private sector. Which of the following is true?a)NBFCs with minimum CAR of 12% and with good track record will be allowed to open private banksb)New banks have to open minimum 25% of branches in rural and semi-urban areasc)They have to provide minimum 40%of loans to priority sectord)All the aboveCorrect answer is option 'D'. Can you explain this answer? for UPSC 2025 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about In 2001, RBI issued a set of guidelines for private sector. Which of the following is true?a)NBFCs with minimum CAR of 12% and with good track record will be allowed to open private banksb)New banks have to open minimum 25% of branches in rural and semi-urban areasc)They have to provide minimum 40%of loans to priority sectord)All the aboveCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for In 2001, RBI issued a set of guidelines for private sector. Which of the following is true?a)NBFCs with minimum CAR of 12% and with good track record will be allowed to open private banksb)New banks have to open minimum 25% of branches in rural and semi-urban areasc)They have to provide minimum 40%of loans to priority sectord)All the aboveCorrect answer is option 'D'. Can you explain this answer?.
In 2001, RBI issued a set of guidelines for private sector. Which of the following is true?a)NBFCs with minimum CAR of 12% and with good track record will be allowed to open private banksb)New banks have to open minimum 25% of branches in rural and semi-urban areasc)They have to provide minimum 40%of loans to priority sectord)All the aboveCorrect answer is option 'D'. Can you explain this answer? for UPSC 2025 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about In 2001, RBI issued a set of guidelines for private sector. Which of the following is true?a)NBFCs with minimum CAR of 12% and with good track record will be allowed to open private banksb)New banks have to open minimum 25% of branches in rural and semi-urban areasc)They have to provide minimum 40%of loans to priority sectord)All the aboveCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for In 2001, RBI issued a set of guidelines for private sector. Which of the following is true?a)NBFCs with minimum CAR of 12% and with good track record will be allowed to open private banksb)New banks have to open minimum 25% of branches in rural and semi-urban areasc)They have to provide minimum 40%of loans to priority sectord)All the aboveCorrect answer is option 'D'. Can you explain this answer?.
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