1. Which of the following banks have a Priority Sector Lending (PSL) target of 75% of their Adjusted Net Bank Credit (ANBC)?
Public Sector Banks only.
Regional Rural Banks (RRBs) and Small Finance Banks (SFBs).
Domestic Scheduled Commercial Banks.
Foreign Banks with 20 branches and above.
Explanation:
While Domestic Commercial Banks and Foreign Banks (20+ branches) have a target of 40% of ANBC, RRBs and SFBs have a higher mandatory target of 75% of ANBC to ensure credit flow to underserved sectors.
2. Which of the following beneficiaries is NOT classified under "Weaker Sections" for Priority Sector Lending purposes?
Scheduled Castes and Scheduled Tribes.
Medium Enterprises.
Self Help Groups (SHGs).
Small and Marginal Farmers.
Explanation:
"Weaker Sections" include small/marginal farmers, SC/STs, SHGs, distressed farmers, and artisans. Medium Enterprises are part of the MSME category but not the "Weaker Sections" sub-target.
3. Loans to individuals for the purchase of a dwelling unit in metropolitan centers are eligible for Priority Sector classification if the loan amount does not exceed:
?45 Lakh
?35 Lakh
?25 Lakh
?50 Lakh
Explanation:
For Metros (population >= 10 lakh), the housing loan limit for PSL is ?35 Lakh (provided the total cost of the dwelling unit does not exceed ?45 Lakh). For other centers, the loan limit is ?25 Lakh.
4. Loans to individuals for educational purposes, including vocational courses, are eligible for Priority Sector Lending up to:
?10 Lakh
?15 Lakh
?20 Lakh
?25 Lakh
Explanation:
Loans to individuals for educational purposes, including vocational courses, not exceeding ?20 lakh will be considered as eligible for priority sector classification.
5. To calculate the "Adjusted Net Bank Credit" (ANBC) for Priority Sector targets, which of the following is ADDED to the Net Bank Credit (NBC)?
Investments in Non-SLR bonds in the Held to Maturity (HTM) category + Other investments eligible for priority sector status.
Investments in SLR securities.
Only Inter-bank deposits.
Investments in Non-SLR categories (HTM category).
Explanation:
ANBC is defined as Net Bank Credit (NBC) plus investments made by banks in non-SLR bonds held in the HTM category, plus other investments eligible to be treated as priority sector. This ensures that banks don't shift assets to investments to lower their lending targets.
6. Under "Social Infrastructure", bank loans up to a limit of _____ per borrower for building schools, drinking water facilities, and sanitation facilities are eligible for PSL.
?5 Crore
?1 Crore
?50 Crore
?10 Crore
Explanation:
Loans up to ?5 crore per borrower for setting up schools, drinking water facilities, and sanitation facilities in Tier II to Tier VI centers are classified as Priority Sector Lending.
7. For Domestic Commercial Banks, Export Credit is eligible for Priority Sector classification only if:
It is up to 2% of ANBC.
It is not eligible at all (except for specific small limits).
It is in the form of Pre-shipment credit only.
It is up to 40% of ANBC.
Explanation:
For Domestic Banks, "Export Credit" is allowed as PSL only up to 2% of ANBC or CEOBE (Credit Equivalent of Off-Balance Sheet Exposure), whichever is higher. This is much lower than the limit for Foreign Banks.
8. Loans for "Agriculture Infrastructure" (like storage godowns, soil conservation) are eligible for PSL up to an aggregate sanctioned limit of:
?10 Crore per borrower
No limit
?100 Crore per borrower
?50 Crore per borrower
Explanation:
Under Priority Sector norms, loans for agriculture infrastructure (warehousing, market yards, cold chains) are capped at ?100 crore per borrower from the banking system.
9. Loans to Startups (as defined by Ministry of Commerce) are eligible for Priority Sector Lending up to:
?50 Crore
?100 Crore
?10 Crore
?5 Crore
Explanation:
Bank loans up to ?50 crore to Startups (as per definition of Ministry of Commerce and Industry) are eligible for finance under the priority sector.
10. Factoring transactions "with recourse" basis for MSMEs are eligible for Priority Sector classification. What does "with recourse" mean here?
The Seller (MSME) remains liable to the Factor if the Buyer defaults.
The Factor takes the full credit risk of the buyer.
The Buyer must pay in advance.
The Bank guarantees the payment.
Explanation:
In "With Recourse" factoring, the factor advances money against invoices but does not indemnify the seller against bad debts. If the customer fails to pay, the factor reclaims the advance from the seller.
11. Is there any ceiling on the expenses for studies in India or abroad for a loan to be classified as Priority Sector Lending (PSL)?
Yes, ?10 Lakh for India, ?20 Lakh for abroad.
Yes, ?50 Lakh overall.
Yes, ?20 Lakh for India, ?30 Lakh for abroad.
No, there is no ceiling on expenses, only the loan limit (?20 Lakh) applies.
Explanation:
Previously, there were expense ceilings. Currently, under PSL norms, there is no cap on the total cost of education. Only the loan amount eligible for PSL classification is capped at ?20 Lakh.
12. For Foreign Banks with less than 20 branches, which specific sub-target under Priority Sector Lending is NOT applicable?
Agriculture and Weaker Sections Targets.
MSME Target.
Total Priority Sector Target (40%).
Export Credit Target.
Explanation:
Foreign banks with less than 20 branches have a total target of 40% of ANBC, but they are exempted from specific sub-targets for Agriculture and Weaker Sections. They can achieve their target largely through Export Credit.
13. For housing loans up to ?30 Lakh, the maximum Loan-to-Value (LTV) ratio permitted by RBI is:
Explanation:
To promote affordable housing, RBI allows an LTV ratio of up to 90% for loans up to ?30 Lakh. For loans between ?30L-?75L, it is 80%.
14. Bank credit to Non-Banking Financial Companies (NBFCs) for on-lending to Agriculture is eligible for Priority Sector classification up to:
5% of bank's total lending.
10% of the bank's total priority sector lending.
an average of 5% of individual bank’s total priority sector lending.
It is not eligible.
Explanation:
Bank credit to NBFCs (excluding MFIs) for on-lending is allowed under PSL up to an overall cap of 5% of the individual bank's total priority sector lending.
15. For Renewable Energy projects, bank loans up to a limit of _____ are eligible for Priority Sector classification.
?50 Crore
?15 Crore
?30 Crore
?10 Crore
Explanation:
Loans up to ?30 crore to borrowers for purposes like solar based power generators, biomass-based power generators, wind mills, micro-hydel plants, etc., are eligible for PSL.
16. Priority Sector Lending Certificates (PSLCs) expire on:
They do not expire.
3 years from the date of purchase.
One year from the date of purchase.
31st March of the financial year in which they are purchased.
Explanation:
PSLCs are valid only for the financial year in which they are traded. Their validity expires on March 31st, and banks must buy fresh certificates for the next year if shortfalls persist.
17. Which of the following is NOT considered a Priority Sector category?
Housing
Loans to Large Corporates for CSR activities
Export Credit
Education
Explanation:
Priority Sector includes Agriculture, MSME, Export Credit, Education, Housing, Social Infrastructure, Renewable Energy, and Others (Weaker Sections). CSR loans to corporates are not part of this.
18. Loans for setting up "Agri-Clinics and Agri-Business Centers" (ACABC) fall under which category of Priority Sector?
Farm Credit
Agriculture Infrastructure
Ancillary Activities
Micro Enterprises
Explanation:
ACABC loans are classified under Ancillary Activities within the Agriculture sector, as they provide professional extension services to farmers.
19. What is the PSL loan limit for individual households for renewable energy purposes (e.g., rooftop solar)?
?1 Crore
?10 Lakh
?50 Lakh
?20 Lakh
Explanation:
While the limit for firms/borrowers is ?30 Crore, for individual households , the loan limit for renewable energy purposes is capped at ?10 Lakh per borrower.