UPSC Exam > UPSC Questions > Consider the following statements1. The Rese...
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Consider the following statements
1. The Reserve Bank of India supervises the functioning of formal sources of loans
2. Securities and exchange Board of India (SEBI) supervises The functioning of informal sources of loans
Which of the statements is/are not correct?
- a)1 Only
- b)2 Only
- c)Both 1 and 2
- d)Neither 1 nor 2
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
Consider the following statements1. The Reserve Bank of India supervi...
- The Reserve Bank of India supervises the functioning of formal sources of loans. For instance, we have seen that the banks maintain a minimum cash balance out of the deposits they receive.
- The RBI monitors the banks in actually maintaining cash balance. Similarly, the RBI sees that the banks give loans not just to profit-making businesses and traders but also to small cultivators, small scale industries, to small borrowers etc.
- Periodically, banks have to submit information to the RBI on how much they are lending, to whom, at what interest rate, etc. There is no organisation which supervises the credit activities of lenders in the informal sector.
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Consider the following statements1. The Reserve Bank of India supervi...
Understanding the Statements
In this question, we have two statements regarding the supervision of loan sources in India.
Statement 1: The Reserve Bank of India supervises the functioning of formal sources of loans
- This statement is correct.
- The Reserve Bank of India (RBI) is the central banking institution in India and is responsible for regulating and supervising the financial system, which includes formal sources of loans such as banks and non-banking financial companies (NBFCs).
Statement 2: Securities and Exchange Board of India (SEBI) supervises the functioning of informal sources of loans
- This statement is not correct.
- SEBI is the regulatory body for the securities market in India and does not oversee informal lending sources, which include moneylenders and other unregulated entities.
- Informal sources operate outside the purview of SEBI and are primarily governed by local laws and regulations.
Conclusion
- Since statement 1 is correct and statement 2 is incorrect, the answer to the question is option B (2 Only).
- This highlights the distinction in regulatory responsibilities between RBI and SEBI.
Key Takeaway
- RBI regulates formal financial institutions.
- SEBI focuses on capital markets and does not supervise informal loan sources.
Understanding these roles is crucial for grasping the regulatory landscape of India's financial system.
In this question, we have two statements regarding the supervision of loan sources in India.
Statement 1: The Reserve Bank of India supervises the functioning of formal sources of loans
- This statement is correct.
- The Reserve Bank of India (RBI) is the central banking institution in India and is responsible for regulating and supervising the financial system, which includes formal sources of loans such as banks and non-banking financial companies (NBFCs).
Statement 2: Securities and Exchange Board of India (SEBI) supervises the functioning of informal sources of loans
- This statement is not correct.
- SEBI is the regulatory body for the securities market in India and does not oversee informal lending sources, which include moneylenders and other unregulated entities.
- Informal sources operate outside the purview of SEBI and are primarily governed by local laws and regulations.
Conclusion
- Since statement 1 is correct and statement 2 is incorrect, the answer to the question is option B (2 Only).
- This highlights the distinction in regulatory responsibilities between RBI and SEBI.
Key Takeaway
- RBI regulates formal financial institutions.
- SEBI focuses on capital markets and does not supervise informal loan sources.
Understanding these roles is crucial for grasping the regulatory landscape of India's financial system.
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Consider the following statements1. The Reserve Bank of India supervises the functioning of formal sources of loans2. Securities and exchange Board of India (SEBI) supervises The functioning of informal sources of loansWhich of the statements is/are not correct?a) 1 Onlyb) 2 Onlyc) Both 1 and 2d) Neither 1 nor 2Correct answer is option 'B'. 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 Consider the following statements1. The Reserve Bank of India supervises the functioning of formal sources of loans2. Securities and exchange Board of India (SEBI) supervises The functioning of informal sources of loansWhich of the statements is/are not correct?a) 1 Onlyb) 2 Onlyc) Both 1 and 2d) Neither 1 nor 2Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements1. The Reserve Bank of India supervises the functioning of formal sources of loans2. Securities and exchange Board of India (SEBI) supervises The functioning of informal sources of loansWhich of the statements is/are not correct?a) 1 Onlyb) 2 Onlyc) Both 1 and 2d) Neither 1 nor 2Correct answer is option 'B'. Can you explain this answer?.
Consider the following statements1. The Reserve Bank of India supervises the functioning of formal sources of loans2. Securities and exchange Board of India (SEBI) supervises The functioning of informal sources of loansWhich of the statements is/are not correct?a) 1 Onlyb) 2 Onlyc) Both 1 and 2d) Neither 1 nor 2Correct answer is option 'B'. 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 Consider the following statements1. The Reserve Bank of India supervises the functioning of formal sources of loans2. Securities and exchange Board of India (SEBI) supervises The functioning of informal sources of loansWhich of the statements is/are not correct?a) 1 Onlyb) 2 Onlyc) Both 1 and 2d) Neither 1 nor 2Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements1. The Reserve Bank of India supervises the functioning of formal sources of loans2. Securities and exchange Board of India (SEBI) supervises The functioning of informal sources of loansWhich of the statements is/are not correct?a) 1 Onlyb) 2 Onlyc) Both 1 and 2d) Neither 1 nor 2Correct answer is option 'B'. Can you explain this answer?.
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