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The origins of priority sector (PS) lending can be traced back to 1966 when Morarji Desai saw a need for increasing credit to agriculture and small industries. However, the definition for PS was only formalised based on a Reserve Bank of India (RBI) report in the National Credit Council in 1972. After bank nationalisation, the PS formulation also allowed Indira Gandhi to assuage important political lobbies, in a poor country with full adult franchise, through such directed lending.
The RBI's predetermined standards for determining suitability for Priority Sector Lending do not correspond to the following?
The RBI's predetermined standards for determining suitability for Priority Sector Lending do not correspond to the following?
- a)Activity specific
- b)Collateral specific
- c)Beneficiary specific
- d)Both (A) and (C)
Correct answer is option 'B'. Can you explain this answer?
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The origins of priority sector (PS) lending can be traced back to 1966...
The RBI's predetermined standards for determining suitability for Priority Sector Lending do not correspond to the Collateral specific.
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The origins of priority sector (PS) lending can be traced back to 1966...
Understanding Priority Sector Lending (PSL)
Priority Sector Lending (PSL) is a significant aspect of India's banking system, aimed at ensuring credit flow to sectors that contribute to the country's economic development. The RBI has set specific parameters to identify eligible sectors.
Key Aspects of PSL Definition
- Activity Specific: PSL focuses on certain activities, such as agriculture, small and medium enterprises, and housing, that are deemed essential for growth.
- Beneficiary Specific: The definition also emphasizes specific groups that benefit from these loans, including marginalized communities and small entrepreneurs.
Why Collateral Specific is Not Included
- Collateral Specific: The RBI's standards do not emphasize collateral requirements for PSL. This is crucial because the intent of PSL is to provide financial support to those who may lack assets for traditional collateral.
- Inclusivity: By not being collateral specific, PSL aims to inclusively support sectors and individuals who are often excluded from mainstream financial services due to lack of tangible assets.
Conclusion
In summary, the correct answer to the question is option 'B' because the predetermined standards for PSL are not based on collateral requirements. Instead, they prioritize activities and beneficiaries, ensuring that critical sectors receive necessary financial assistance without the barriers of collateral. This approach is essential for fostering economic growth and inclusivity in the banking sector.
Priority Sector Lending (PSL) is a significant aspect of India's banking system, aimed at ensuring credit flow to sectors that contribute to the country's economic development. The RBI has set specific parameters to identify eligible sectors.
Key Aspects of PSL Definition
- Activity Specific: PSL focuses on certain activities, such as agriculture, small and medium enterprises, and housing, that are deemed essential for growth.
- Beneficiary Specific: The definition also emphasizes specific groups that benefit from these loans, including marginalized communities and small entrepreneurs.
Why Collateral Specific is Not Included
- Collateral Specific: The RBI's standards do not emphasize collateral requirements for PSL. This is crucial because the intent of PSL is to provide financial support to those who may lack assets for traditional collateral.
- Inclusivity: By not being collateral specific, PSL aims to inclusively support sectors and individuals who are often excluded from mainstream financial services due to lack of tangible assets.
Conclusion
In summary, the correct answer to the question is option 'B' because the predetermined standards for PSL are not based on collateral requirements. Instead, they prioritize activities and beneficiaries, ensuring that critical sectors receive necessary financial assistance without the barriers of collateral. This approach is essential for fostering economic growth and inclusivity in the banking sector.
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The origins of priority sector (PS) lending can be traced back to 1966 when Morarji Desai saw a need for increasing credit to agriculture and small industries. However, the definition for PS was only formalised based on a Reserve Bank of India (RBI) report in the National Credit Council in 1972. After bank nationalisation, the PS formulation also allowed Indira Gandhi to assuage important political lobbies, in a poor country with full adult franchise, through such directed lending.The RBIs predetermined standards for determining suitability for Priority Sector Lending do not correspond to the following?a)Activity specificb)Collateral specificc)Beneficiary specificd)Both (A) and (C)Correct answer is option 'B'. Can you explain this answer?
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The origins of priority sector (PS) lending can be traced back to 1966 when Morarji Desai saw a need for increasing credit to agriculture and small industries. However, the definition for PS was only formalised based on a Reserve Bank of India (RBI) report in the National Credit Council in 1972. After bank nationalisation, the PS formulation also allowed Indira Gandhi to assuage important political lobbies, in a poor country with full adult franchise, through such directed lending.The RBIs predetermined standards for determining suitability for Priority Sector Lending do not correspond to the following?a)Activity specificb)Collateral specificc)Beneficiary specificd)Both (A) and (C)Correct answer is option 'B'. Can you explain this answer? for Bank Exams 2025 is part of Bank Exams preparation. The Question and answers have been prepared according to the Bank Exams exam syllabus. Information about The origins of priority sector (PS) lending can be traced back to 1966 when Morarji Desai saw a need for increasing credit to agriculture and small industries. However, the definition for PS was only formalised based on a Reserve Bank of India (RBI) report in the National Credit Council in 1972. After bank nationalisation, the PS formulation also allowed Indira Gandhi to assuage important political lobbies, in a poor country with full adult franchise, through such directed lending.The RBIs predetermined standards for determining suitability for Priority Sector Lending do not correspond to the following?a)Activity specificb)Collateral specificc)Beneficiary specificd)Both (A) and (C)Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for Bank Exams 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The origins of priority sector (PS) lending can be traced back to 1966 when Morarji Desai saw a need for increasing credit to agriculture and small industries. However, the definition for PS was only formalised based on a Reserve Bank of India (RBI) report in the National Credit Council in 1972. After bank nationalisation, the PS formulation also allowed Indira Gandhi to assuage important political lobbies, in a poor country with full adult franchise, through such directed lending.The RBIs predetermined standards for determining suitability for Priority Sector Lending do not correspond to the following?a)Activity specificb)Collateral specificc)Beneficiary specificd)Both (A) and (C)Correct answer is option 'B'. Can you explain this answer?.
The origins of priority sector (PS) lending can be traced back to 1966 when Morarji Desai saw a need for increasing credit to agriculture and small industries. However, the definition for PS was only formalised based on a Reserve Bank of India (RBI) report in the National Credit Council in 1972. After bank nationalisation, the PS formulation also allowed Indira Gandhi to assuage important political lobbies, in a poor country with full adult franchise, through such directed lending.The RBIs predetermined standards for determining suitability for Priority Sector Lending do not correspond to the following?a)Activity specificb)Collateral specificc)Beneficiary specificd)Both (A) and (C)Correct answer is option 'B'. Can you explain this answer? for Bank Exams 2025 is part of Bank Exams preparation. The Question and answers have been prepared according to the Bank Exams exam syllabus. Information about The origins of priority sector (PS) lending can be traced back to 1966 when Morarji Desai saw a need for increasing credit to agriculture and small industries. However, the definition for PS was only formalised based on a Reserve Bank of India (RBI) report in the National Credit Council in 1972. After bank nationalisation, the PS formulation also allowed Indira Gandhi to assuage important political lobbies, in a poor country with full adult franchise, through such directed lending.The RBIs predetermined standards for determining suitability for Priority Sector Lending do not correspond to the following?a)Activity specificb)Collateral specificc)Beneficiary specificd)Both (A) and (C)Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for Bank Exams 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The origins of priority sector (PS) lending can be traced back to 1966 when Morarji Desai saw a need for increasing credit to agriculture and small industries. However, the definition for PS was only formalised based on a Reserve Bank of India (RBI) report in the National Credit Council in 1972. After bank nationalisation, the PS formulation also allowed Indira Gandhi to assuage important political lobbies, in a poor country with full adult franchise, through such directed lending.The RBIs predetermined standards for determining suitability for Priority Sector Lending do not correspond to the following?a)Activity specificb)Collateral specificc)Beneficiary specificd)Both (A) and (C)Correct answer is option 'B'. Can you explain this answer?.
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