Given below are two statements:
Statement I: NABARD is one of the multi-agency institutions that make up the institutional structure of rural banking.
Statement II: Regional rural banks are expected to dispense adequate credit at cheaper rates.
In the light of the above statements, choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Statement I is false but Statement II is true.
Statement I: NABARD is one of the multi-agency institutions that make up the institutional structure of rural banking. — False. The multi-agency institutions are commercial banks, regional rural banks, cooperatives and land development banks. NABARD, set up in 1982, is the apex body that coordinates all of them.
Statement II: Regional rural banks are expected to dispense adequate credit at cheaper rates. — True. RRBs are one of the multi-agency institutions, and all of these are expected to give adequate credit at cheaper rates.
NCERT (2026-27): “5.3 Credit and Marketing in Rural Areas … A major change occurred after 1969 when India adopted social banking and multi-agency approach to adequately meet the needs of rural credit. … National Bank for Agriculture and Rural Development (NABARD) was set up in 1982 as an apex body to coordinate the activities of all institutions involved in the rural financing system. The Green Revolution was a harbinger of major changes in the credit system as it led to the diversification of the portfolio of rural credit towards production-oriented lending. The institutional structure of rural banking today consists of a set of multi-agency institutions, namely, commercial banks, regional rural banks (RRBs), cooperatives and land development banks. They are expected to dispense adequate credit at cheaper rates. …” |