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Banking Exams Exam  >  Banking Exams Questions  >  What is Priority Sector Lending?a)A specially... Start Learning for Free
What is Priority Sector Lending?
  • a)
    A specially marked territory or enclave within the national borders of a country that has more liberal economic laws than the rest of the country
  • b)
    A financial inclusion program of the Government of India open to Indian citizens
  • c)
    A financial product commonly sold by banks, thrift institutions, and credit unions
  • d)
    It means those sectors which the Government of India and Reserve Bank of India consider as important for the development of the basic needs of the country and are to be given priority over other sectors
  • e)
    None of the above
Correct answer is option 'D'. Can you explain this answer?
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What is Priority Sector Lending?a)A specially marked territory or encl...
Priority Sector Lending means those sectors which the Government of India and Reserve Bank of India consider as important for the development of the basic needs of the country and are to be given priority over other sectors.
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Direction: Non-Banking Financial Companies (NBFCs) are financial institutions that provide banking services without holding a banking license. They operate in various segments such as consumer finance, vehicle finance, housing finance, and microfinance, among others. Banks provide finance to NBFCs in the form of term loans, working capital loans, and credit lines. The finance is typically used by NBFCs to fund their lending activities, purchase assets, and other operational expenses. Banks also provide credit enhancement facilities such as guarantees and letters of credit to support NBFCs in raising funds from the market. The Reserve Bank of India (RBI) regulates the lending activities of banks to NBFCs. The RBI has mandated that banks should classify their lending to NBFCs as per their risk assessment and ensure that the exposure to individual NBFCs does not exceed the prescribed limits.Q. Which of the following institutions is not included in the definition of NBFC?

Read the following passage carefully and answer the questions given below it. Certain words/phrases have been underlineto help you locate them while answering some of the questions.The modern world requires us to repose trust in many anonymous institutions. We strap ourselves in a flying tin can with two hundred other people not because we know the pilot but because we believe that airline travel is safe. Our trust in these institutions depends on two factors : skills and ethics. We expect that the people who run these institutions know what they are doing, that they build and operate machines that work as they are supposed to and that they are looking out for our welfare even though we are strangers.When one of these factors is weak or absent, trust breaks down and we either pay a high price in safety- as in the Bhopal tragedy -or a large ‘welfare premium’ such as the elaborate security measures at airports. Trust-deficient environments work in the favour of the rich and powerful, who can commandpremiumtreatment and afford welfare premiums. Poor people can command neither; which is why air travel is safer than train travel, which in turn is safer than walking by the road side.Every modern society depends on the trust in the skills and ethics of a variety of institutions such as schools and colleges, hospital and markets. If we stopped believing in theexpertiseof our teachers, doctors and engineers, we will stop being a modern society.As the Institution among institutions, it is the duty of the state to ensure that all other institutions meet their ethicalobligations. The Indian state has failed in its regulatory role. Consequently, we cannot trust our schools to turn out good graduates, we cannot ensure that our colleges turn out well trained engineers and we cannot guarantee that our engineers will turn out to be good products.Last year, I was invited to speak at an undergraduate research conference. Most of the participants in this conference were students at the best engineering colleges in the State. One student who was driving me back and forthrecounteda story about the previous year’s final exam. One of his papers had a question from a leading textbook to which the textbook’s answer was wrong. The student was in a dilemma : should he write the (wrong) answer as given in the textbook or should he write the right answer using his own analytical skills. He decided to do the latter and received a zero on that question. Clearly, as the student had suspected, the examiners were looking at the textbook answer while correcting the examination papers instead of verifying its correctness.The behaviour of these examiners is a breakdown of institutional morals, with consequences for the skills acquired by students. I say institutional morals, for the failure of these examiners is not a personal failure. At the same conference I met a whole range of college teachers, all of whom were drafted as examiners at some time or the other. Without exception, they were dedicated individuals who cared about the education and welfare of their students. However, when put in the institutional role of evaluating an anonymous individual, they fail in fulfilling their responsibilities. When some of our best colleges are run in this fashion, is it any wonder that we turn outunskilledengineers and scientists ? If, as we are led to expect, there is a vast increase in education at all levels and the regulatory regime is as weak as it is currently, isn’t it likely that the trust deficit is only going to increase ?We are all aware of the consequences of ignoring corruption at all levels of society. While institutional failures in governance are obvious, I think the real problem lies deeper, in the failure of every day institutions that are quite apart from institutions that impinge on our lives only on rare occasions. It is true that our lives are made more miserable by government officials demanding bribes for all sorts of things, but what about the everyday lying andcheating and breaking of rules with people who are strangers ?Let me give you an example that many of us have experienced. I prefer buying my fruits and vegetables from roadside vendors rather than chain stores. To the vendor, I am probably an ideal customer, since I do not bargain and I do not take hours choosing the best pieces, instead, letting the vendor do the selecting. The market near my house is quite busy; as a result, most vendors are selling their wares to strangers. It takes a while before a particular vendor realises that I am arepeatcustomer. In such a situation trust is crucial. I have a simple rule : if a vendorpalms offa bad piece whose defects are obvious, I never go back to that person again. It is amazing how often that happens.In my opinion, the failure of institutional ethics is as much about these little abuses of trust as anything else. Everyday thievery is like roadside trash; if you let it accumulate the whole neighbourhood stinks.Q. Why, according to the author, is the behaviour of examiners a breakdown of institutional morals ?

Direction: Read the following information carefully and answer the question given below-In each of the questions given below is an incomplete sentence which must be filled/completed with one of the sentences given as. Choose the correct option and complete the given sentences.As pressures mount to stop yet another bail-out of a hybrid institution, one which positioned itself as a private professionally run infrastructure developer and financier when it suited it and as a sovereign backed group at other times, ________________on the cost of erosion of the huge amount of capital originally deployed either by the government in some of these institutions or by banks or investment institutions, which the government controls and the value destruction presided over by successive governments, still no one is heeding to that.

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What is Priority Sector Lending?a)A specially marked territory or enclave within the national borders of a country that has more liberal economic laws than the rest of the countryb)A financial inclusion program of the Government of India open to Indian citizensc)A financial product commonly sold by banks, thrift institutions, and credit unionsd)It means those sectors which the Government of India and Reserve Bank of India consider as important for the development of the basic needs of the country and are to be given priority over other sectorse)None of the aboveCorrect answer is option 'D'. Can you explain this answer?
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What is Priority Sector Lending?a)A specially marked territory or enclave within the national borders of a country that has more liberal economic laws than the rest of the countryb)A financial inclusion program of the Government of India open to Indian citizensc)A financial product commonly sold by banks, thrift institutions, and credit unionsd)It means those sectors which the Government of India and Reserve Bank of India consider as important for the development of the basic needs of the country and are to be given priority over other sectorse)None of the aboveCorrect answer is option 'D'. Can you explain this answer? for Banking Exams 2025 is part of Banking Exams preparation. The Question and answers have been prepared according to the Banking Exams exam syllabus. Information about What is Priority Sector Lending?a)A specially marked territory or enclave within the national borders of a country that has more liberal economic laws than the rest of the countryb)A financial inclusion program of the Government of India open to Indian citizensc)A financial product commonly sold by banks, thrift institutions, and credit unionsd)It means those sectors which the Government of India and Reserve Bank of India consider as important for the development of the basic needs of the country and are to be given priority over other sectorse)None of the aboveCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for Banking Exams 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for What is Priority Sector Lending?a)A specially marked territory or enclave within the national borders of a country that has more liberal economic laws than the rest of the countryb)A financial inclusion program of the Government of India open to Indian citizensc)A financial product commonly sold by banks, thrift institutions, and credit unionsd)It means those sectors which the Government of India and Reserve Bank of India consider as important for the development of the basic needs of the country and are to be given priority over other sectorse)None of the aboveCorrect answer is option 'D'. Can you explain this answer?.
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