Economics · Banking Sector and Mixed Economy
In a mixed economy framework like India's, which of the following serves as the most compelling reason for the government to mandate Priority Sector Lending (PSL) targets for commercial banks?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1To enforce uniform pricing and quality standardisation across all economic products.
- 2To correct market failures by steering credit toward socially critical sectors that a pure profit motive might neglect.✓
- 3To ensure that all major sectors of the economy are centrally planned and state-controlled.
- 4To phase out private sector banks entirely from the financial ecosystem.
Correct answer
To correct market failures by steering credit toward socially critical sectors that a pure profit motive might neglect.
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