Small Finance Banks will be required to extend.....of its ANBC to the sectors eligible for classification as priority sector lending (PSL) by the Reserve Bank.

BANKING GENERAL KNOWLEDGE

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

Small Finance Banks will be required to extend____of its ANBC to the sectors eligible for classification as priority sector lending (PSL) by the Reserve Bank.

A	55%
B	35%
C	75%
D	0.5

Explanation:

Detailed explanation-1: -The small finance banks will be required to extend 75 per cent of its Adjusted Net Bank Credit (ANBC) to the sectors eligible for classification as priority sector lending (PSL) by the Reserve Bank.

Detailed explanation-2: -Target for priority sector lending – UCBs The overall priority sector lending (PSL) target for UCBs stood at 40% of the adjusted net bank credit (ANBC) or credit equivalent amount of off-balance sheet exposure (CEOBSE), whichever is higher.

Detailed explanation-3: -Different banks have different targets like: Small finance banks: 75% of net credit. Regional rural banks: 75% of net credit. Commercial banks (both public and private): 40% of net credit.

Detailed explanation-4: -18 per cent of ANBC or Credit Equivalent Amount of Off-Balance Sheet Exposure, whichever is higher. Within the 18 per cent target for agriculture, a target of 8 percent of ANBC or Credit Equivalent Amount of Off-Balance Sheet Exposure, whichever is higher is prescribed for Small and Marginal Farmers.

Detailed explanation-5: -4. SFBs are allowed to lend to registered NBFC-MFIs and other MFIs which have a ‘gross loan portfolio’ (GLP) of up to ₹500 crore as on March 31 of the previous financial year, for the purpose of on-lending to priority sector.

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