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    Question

    Under Priority Sector Lending (PSL) guidelines, which

    category of banks is permitted a specific exemption to allocate up to 32% of their PSL target towards export credit?
    A Regional Rural Banks with fewer than 20 branches Correct Answer Incorrect Answer
    B Foreign banks with fewer than 20 branches Correct Answer Incorrect Answer
    C Domestic Scheduled Commercial Banks with fewer than 20 branches Correct Answer Incorrect Answer
    D Urban Cooperative Banks with fewer than 20 branches Correct Answer Incorrect Answer
    E Small Finance Banks with fewer than 20 branches Correct Answer Incorrect Answer

    Solution

    • As per RBI’s Priority Sector Lending guidelines, foreign banks operating in India with fewer than 20 branches are allowed a special dispensation. • They can allocate up to 32% of their adjusted net bank credit (ANBC) towards export credit to meet their PSL obligations. • This exemption recognizes the business model and operational constraints of smaller foreign banks in India. • Other categories of banks (such as RRBs, SFBs, SCBs, or UCBs) are subject to different PSL targets without this specific export credit allocation. Thus, the correct answer is foreign banks with fewer than 20 branches.

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