Question
If Indian banks are unable to meet the Priority Sector
Lending (PSL) sub-target of 18% for the agricultural sector, with whom are they required to report the shortfall?Solution
• Under the Priority Sector Lending (PSL) guidelines, banks must allocate 18% of their Adjusted Net Bank Credit (ANBC) towards agricultural lending. • If banks fail to meet this target, they are required to report the shortfall to the Reserve Bank of India (RBI). • Depending on the nature and extent of the shortfall, RBI may impose corrective measures, including requiring banks to deposit the shortfall amount in specific funds like the Rural Infrastructure Development Fund (RIDF), which is managed through NABARD. • Thus, the immediate reporting obligation is to the RBI.
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