Question

Assertion (A) : Banks give loans not only to profit making businesses but also to small cultivators. Reason (R) : The RBI supervises the functioning of formal sources of loans.​

Answer 1

Answer :

Both A and R are correct and R is the correct explaining of A.

Answer 2

The RBI ensures that banks provide loans to small farmers, small-scale businesses, small borrowers, and other borrowers in addition to profit-making companies and traders.

• Both the claim and the justification are true, but justification is not the proper justification for the claim.
• The Reserve Bank of India keeps an eye on how much money banks are lending out and how much cash they are holding in reserve.
• Additionally, it makes sure that tiny cultivators, small businesses, and small borrowers receive loans from banks as well as profitable enterprises.
• Banks are required to periodically provide the RBI with information regarding the sums lent to whom and at what interest rates.
• Proper oversight is required to guarantee both the preservation of equity in the financial industry and the provision of growth opportunities for small businesses.
• Also, this prevents situations like the Great Depression of the 1930s by preventing banks from lending out more money than they should.

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