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The central bank recently revised the incentive structure for PSL to boost credit flow

Published on June 26, 2024
Current Context: The Reserve Bank of India (RBI) implemented changes to the Priority Sector Lending (PSL) program to encourage banks to lend more in areas with lower credit availability.
The central bank recently revised the incentive structure for PSL to boost credit flow
  • Here's a breakdown of the revision:
    • Higher weightage for underserved districts: Districts with a low per capita PSL (less than ₹9,000) get a weightage of 125% for any incremental PSL credit they achieve. This incentivizes banks to lend more in these areas.
    • Lower weightage for saturated districts: Conversely, districts with a high per capita PSL (more than ₹42,000) get a weightage of only 90% for incremental PSL credit. This discourages banks from focusing solely on already well-served areas.

Question:

1 What is the weightage given to districts with a low per capita PSL (less than ₹9,000) for incremental PSL credit?

  • A) 40%
  • B) 90%
  • C) 125%
  • D) None of the above
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