Banking · Priority Sector Lending
Under the Priority Sector Lending guidelines issued by the RBI, if a bank fails to meet its mandated targets or sub-targets, what is the regulatory consequence regarding the shortfall amount?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Shortfall amounts are allocated to the Rural Infrastructure Development Fund (RIDF) established with NABARD or other funds as decided by the RBI from time to time.✓
- 2The bank must invest the shortfall in the Priority Sector Lending Certificates market within forty-eight hours of the fiscal year end.
- 3The entire amount is forfeited to the Deposit Insurance and Credit Guarantee Corporation as a penalty for non-compliance.
- 4The shortfall must be deposited with NABARD in the Rural Infrastructure Development Fund at a fixed bank rate minus two percent within 48 hours.
Correct answer
Shortfall amounts are allocated to the Rural Infrastructure Development Fund (RIDF) established with NABARD or other funds as decided by the RBI from time to time.
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