UPSC Prelims 2011 · GS Paper I

Question 83: Economy and Social Development

In India, which of the following have the highest share in the disbursement of credit to agriculture and allied activities ?

aCommercial Banks

bCooperative Banks

cRegional Rural Banks

dMicrofinance Institutions

AnswerThe answer is (a).

Commercial banks, public and private sector together, give the largest share of institutional credit to agriculture and allied activities, well above cooperative banks and regional rural banks. Priority sector lending norms require commercial banks to direct a fixed share of their credit, 18 per cent for agriculture, to farming. Microfinance institutions lend a much smaller amount.

Why each option is right or wrong

(a) Right: commercial banks have the highest share of agricultural credit.
(b) Cooperative banks are important locally but lend less in total.
(c) Regional rural banks have a smaller share than commercial banks.
(d) Microfinance institutions account for only a small share.

Explanation: written by UPSC Grade, not by UPSC.

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Source: UPSC, Civil Services (Preliminary) Examination 2011, General Studies Paper I, Series A. The paper on upsc.gov.in.