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RAS question

Priority Sector Lending target for domestic commercial banks is:

Correct answer: (C) 40% of ANBC.

Domestic commercial banks must lend 40% of Adjusted Net Bank Credit to priority sectors under the RBI Priority Sector Lending target.

  1. (A)

    50% of ANBC

  2. (B)

    30% of ANBC

  3. (C)

    40% of ANBC

  4. (D)

    25% of ANBC

Explanation

The RBI's Priority Sector Lending directions set the total priority-sector target for domestic commercial banks at 40% of ANBC, or CEOBE where applicable, whichever is higher. That is why 40% of ANBC is the right answer here, not a lower or higher figure. The same RBI target table also explains the structure behind the headline number: agriculture has an 18% sub-target, micro enterprises have a 7.5% sub-target, and advances to weaker sections have a 12% sub-target. For RAS economy questions, the examiner usually tests the headline statutory target first, then checks whether the aspirant can separate it from sector-wise sub-targets and from targets for other types of banks.

Why the other options are wrong

  • (A) 50% of ANBC is above the RBI target for domestic commercial banks; the notified total priority-sector target is 40%.
  • (B) 30% of ANBC is below the RBI target, so it understates the required lending to priority sectors.
  • (D) 25% of ANBC is also below the RBI target and does not match the priority-sector lending requirement for domestic commercial banks.

Concept

This tests Priority Sector Lending under banking regulation, a recurring Indian Economy area in RAS because it links credit policy with agriculture, MSMEs and weaker-section lending. The key exam skill is distinguishing the overall PSL target from its sub-targets.

Source

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