Question

Which of the following is not a role played by RBI to regulate the functions of banks?

• A. Commercial banks need to maintain cash reserve with RBI
• B. RBI ensures that loan is extended to both profit making and small business
• C. RBI ensures that money lenders charge a reasonable rate of interest from its borrowers
• D. RBI ensures that banks inform about their lending activities to it periodically

Answer 1

The correct option is C RBI ensures that money lenders charge a reasonable rate of interest from its borrowers

Option C is incorrect.
Its not the RBI but the nationalised banks that ensures that the rate of interest charged by the MFI to eventual beneficiaries are at reasonable level, say around 22-24% per annum (all inclusive) on reducing balance. This is particularly essential for the large and well established MFIs