CMA Foundation · Fundamentals of Business Economics and Management · Money and Banking
A farmer in a village needs a medium-term loan for buying a tractor, and wants an institution created mainly to provide credit to agriculture and rural areas, with special focus on small cultivators. Which type of bank is most directly designed for this purpose?
A Regional Rural Bank is the right choice. These banks were created to give credit and banking services to small and marginal farmers, artisans and rural workers. Foreign exchange dealers, stock exchanges and corporate investment banks do not focus on rural agricultural lending.
- ARegional Rural BankCorrect
- BForeign exchange dealer bank
- CStock exchange
- DInvestment bank dealing in large corporate issues
Explanation
Regional Rural Banks were set up to supply credit and banking facilities to small and marginal farmers, artisans and agricultural labourers in rural areas. The other options do not target rural cultivators. Hence the Regional Rural Bank is correct.
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