Question

Q34) Priority sector lending by banks in India constitutes the lending to which of the following sectors?

i) Medium Enterprises

ii) Social Infrastructure

iii) Renewable Energy

iv) Import credit

• A. a) i, iii and iv only
• B. b) i, ii and iii only
• C. c) ii and ii only
• D. d) All of the above

Answer 1

The correct option is B

b) i, ii and iii only

Ans: B
Explanation: Priority Sector refers to those sectors of the economy which may not get timely and adequate credit in the absence of this special dispensation. Priority Sector Lending is an important role given by the Reserve Bank of India (RBI) to the banks for providing a specified portion of the bank lending to few specific sectors like agriculture and allied activities, micro and small enterprises, poor people for housing, students for education and other low income groups and weaker sections. This is essentially meant for an all-round development of the economy as opposed to focusing only on the financial sector.

Categories under priority sector

i. Agriculture

ii. Micro, Small and Medium Enterprises

iii. Export Credit

iv. Education

v. Housing

vi. Social Infrastructure

vii. Renewable Energy