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Question

Which of the following is instruments that enable banks to achieve their priority sector lending targets without actually disbursing loans to sectors outside their comfort zone? (STATIC)

A Priority Sector Lending Certificates Correct Answer Incorrect Answer
B Commercial Sector Lending Certificate Correct Answer Incorrect Answer
C Private Sector Lending Certificate Correct Answer Incorrect Answer
D Publis Sector Lending Certification Correct Answer Incorrect Answer
E None of the above Correct Answer Incorrect Answer

Solution

Priority Sector Lending Certificates (PSLCs) are instruments that enable banks to achieve their priority sector lending targets without actually disbursing loans to sectors outside their comfort zone. PSL certificates allow banks sitting on surplus loans to a priority sector to sell certificates to banks that haven’t met their targets, pocketing a sizeable fee for this trade.

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