Banking Sector Updates: RBI Guidelines, Strategic Moves, and Financial Targets

RBI has recently updated its priority sector lending guidelines to promote financial inclusion and equitable credit distribution across districts in India.

Key Changes:

1. Focus on Economically Disadvantaged Districts:
   • Banks are encouraged to provide small loans in economically disadvantaged districts with low average loan sizes.
   • Discouragement of lending in districts with high average loan sizes.
2. Weightage System:
   • Low Credit Availability Districts: Loans will receive a weightage of 125% starting FY25 if credit availability is less than Rs 9,000 per person.
   • High Credit Availability Districts: Loans will have a weightage of 90% if credit availability exceeds Rs 42,000 per person.
   • Other districts will maintain the current weightage of 100%, except for outlier districts.
3. District Ranking System:
   • RBI will rank districts based on per capita credit flow to the priority sector.
   • Incentives will be provided for districts with lower credit flow and disincentives for those with higher flow.

Multiple Choice Questions (MCQs):

1. What is the revised weightage for fresh priority sector loans in districts with low credit availability (less than Rs 9,000 per person) starting FY25?
   • A) 100%
   • B) 125%
   • C) 90%
   • D) 110%
   Answer: B) 125%
2. In districts with high loan availability (more than Rs 42,000 per person), what weightage will loans receive under the new RBI guidelines?
   • A) 100%
   • B) 125%
   • C) 90%
   • D) 110%
   Answer: C) 90%
3. Under the updated priority sector guidelines, what districts will continue to have the current weightage of 100%?
   • A) All districts
   • B) Districts with low credit availability
   • C) Districts with high loan sizes
   • D) None of the above
   Answer: A) All districts
4. What is the primary objective of RBI’s district ranking based on per capita credit flow?
   • A) To penalize districts with high credit flow
   • B) To encourage banks to lend in economically disadvantaged districts
   • C) To provide incentives for districts with high loan availability
   • D) To discourage lending in all districts
   Answer: B) To encourage banks to lend in economically disadvantaged districts
5. Which bank is diversifying its credit risk portfolio by venturing into personal loans and credit cards?
   • A) State Bank of India
   • B) Punjab National Bank
   • C) HDFC Bank
   • D) Equitas Small Finance Bank
   Answer: D) Equitas Small Finance Bank