UPSC Prelims 2017 · GS Paper I
Question 40: Economy and Social Development
What is the purpose of setting up of Small Finance Banks (SFBs) in India ?
- 1.To supply credit to small business units
- 2.To supply credit to small and marginal farmers
- 3.To encourage young entrepreneurs to set up business particularly in rural areas.
Select the correct answer using the code given below :
AnswerUPSC’s answer is (a).
The RBI's guidelines for Small Finance Banks say their aim is financial inclusion: providing savings vehicles and supplying credit to small business units, small and marginal farmers, micro and small industries and other unorganised sector entities. So Statements 1 and 2 are stated purposes. Encouraging young entrepreneurs to set up business in rural areas is not a stated purpose of SFBs. Remember: SFBs serve the underserved, meaning small businesses, small farmers and the unorganised sector.
- 1. Supplying credit to small business units is a stated purpose.
- 2. Credit to small and marginal farmers is a stated purpose.
- 3. Encouraging young rural entrepreneurs is not a stated purpose of SFBs.
How you could have got this
- If you were sure statement 3 is not correct, (b), (c) and (d) go: each of them includes 3.
What you needed to know: Encouraging young rural entrepreneurs is not a stated purpose of SFBs.
Only (a) is left. You didn’t need statements 1 or 2.
Which options go is worked out from UPSC’s key and the options, not by a model.
Why each option is right or wrong
- (a) Right: credit to small business units and to small and marginal farmers are the stated purposes.
- (b) Wrong: encouraging young rural entrepreneurs (3) is not a stated purpose, and it leaves out small business credit.
- (c) Wrong: it leaves out farmers and includes the unstated purpose 3.
- (d) Wrong: statement 3 is not among the purposes laid down.
Answer: UPSC’s key. Explanation: written by UPSC Grade, not by UPSC.
Source: UPSC, Civil Services (Preliminary) Examination 2017, General Studies Paper I, Series A. The paper on upsc.gov.in.