Regional rural banks:

1. Have limited area of operation
2. Have free access to liberal refinance facilities from NABARD
3. Are required to lend only to weaker sections

Select the correct answer using the codes given below.
a) 1 and 3 only
b) 2 and 3 only
c) 1 and 2 only
d) 1, 2 and 3

Ans-c

Explanation–

Sources of funds of RRBs comprise of owned fund, deposits, borrowings from NABARD, Sponsor Banks and other sources including SIDBI and National Housing Bank.

NABARD website says “Department of Refinance is vested with the core function of providing refinance in respect of term loan for both Farm Sector and Non – Farm Sector activities for a period upto 3-15 years and is released to only eligible institutions viz. SCARDBs, SCBs, Regional Rural Banks or Scheduled commercial banks or any other financial institution, approved by Reserve Bank of India (RBI) as defined under Section 25 of NABARD Act.”Therefore statement 2 is correct. We can eliminate option 1.

The area of operation of the RRBs is limited to notified few districts in a State. Therefore statement 1 is also correct.

The RRBs mobilise deposits primarily from rural/semi-urban areas and provide loans and advances mostly to small and marginal farmers, agricultural labourers , rural artisans and other segments of priority sector.Priority sector lending includes loans given to agriculture, micro, small and medium enterprises, education, housing, weaker sections, social infrastructure and renewable energy segments. Therefore, statement 3 is wrong as it says ‘only’ weaker sections which does not include PSL.

Thus, option c is correct.