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      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?
      A Deposit the shortfall with RBI Correct Answer Incorrect Answer
      B Deposit the shortfall with NABARD under the Rural Infrastructure Development Fund (RIDF) Correct Answer Incorrect Answer
      C Deposit the shortfall under National Equity Fund with SIDBI Correct Answer Incorrect Answer
      D Deposit with the Government of India Correct Answer Incorrect Answer
      E None of the above Correct Answer Incorrect Answer

      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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