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    Question

    Which category of banks has the highest Priority Sector

    Lending (PSL) target as a percentage of Adjusted Net Bank Credit (ANBC)?
    A Foreign banks with fewer than 20 branches Correct Answer Incorrect Answer
    B Domestic Scheduled Commercial Banks (SCBs) Correct Answer Incorrect Answer
    C Regional Rural Banks (RRBs) and Small Finance Banks (SFBs) Correct Answer Incorrect Answer
    D Primary Urban Cooperative Banks (UCBs) Correct Answer Incorrect Answer
    E Private Sector Banks Correct Answer Incorrect Answer

    Solution

    • Regional Rural Banks (RRBs) and Small Finance Banks (SFBs) are mandated to allocate 75% of their ANBC or Credit Equivalent of Off-Balance Sheet Exposure (CEOBE) to Priority Sector Lending. • This is the highest PSL target among all categories of banks. • In contrast: o Domestic SCBs and UCBs typically have 40% PSL targets, o Foreign banks with fewer than 20 branches have lower and differentiated PSL norms, often with exemptions. This higher requirement for RRBs and SFBs reflects their developmental role in promoting financial inclusion and serving underbanked sectors.

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