Multiple choice

Direct credit controls in India are of three types:

(a) It is part of the interest rate structure. (b) Banks are required to keep 21.50% of their deposits in the form of government securities. (c) Banks are required to lend to the priority sector to the extent of 40% of their advances.

Which of the above is not true?

  1. (a) only

  2. (b) only

  3. (c) only

  4. None of these
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

All are true. 

Direct credit controls in India are of three types:

  • It is part of the interest rate structure, i.e. rate on small savings and provident funds are administratively set.

  • Banks are required to keep 21.50% of their deposits in the form of government securities.

  • Banks are required to lend to the priority sector to the extent of 40% of their advances.

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