Agricultural Marketing, Credit & Rural Finance — Practice

Question 1

In which year was e-NAM launched?

Accepted Answer

2016.

Question 2

Name the three tiers of India's rural cooperative credit structure.

Accepted Answer

PACS (village level), DCCB (district level), SCB (state apex level).

Question 3

What is RBI's overall PSL target as a percentage of ANBC?

Accepted Answer

40%.

Question 4

What specific problem did the APMC system come to be criticised for, despite its original protective intent?

Accepted Answer

Restricting farmers to a limited set of licensed intermediaries within a fixed mandi, fragmenting the national market state-by-state, and layering multiple commission charges between farmer and final buyer.

Question 5

What is NABARD's actual functional role in the rural-credit structure?

Accepted Answer

A refinancing institution at the apex of the structure, providing funds to cooperative banks, RRBs and commercial banks for rural/agricultural lending, plus supervision of cooperative banks/RRBs and rural infrastructure funding via RIDF — not a direct lender to individual farmers.

Question 6

State the agriculture PSL target and its Small and Marginal Farmers sub-target, both as percentages of ANBC.

Accepted Answer

Agriculture: 18% of ANBC. Small and Marginal Farmers sub-target: 10% of ANBC (within the 18% agriculture target).

Question 7

Explain why Regional Rural Banks were established with a joint Centre-sponsor bank-State ownership structure, rather than as purely private or purely government institutions.

Accepted Answer

RRBs (established from 1975) were designed to combine a public-sector bank's commercial banking expertise and resources with a specific, targeted rural/semi-urban credit mandate that a typical commercial branch network did not prioritise strongly enough on its own. The joint Centre-sponsor bank-State ownership structure ensures accountability to both the sponsoring bank and the concerned state government, embedding a rural-focus mandate directly into the institution's governance rather than leaving it to a commercial bank's ordinary branch-expansion incentives.

Question 8

A bank extends a loan to a small and marginal farmer. Explain which PSL targets this single loan can count toward, and why this overlap exists.

Accepted Answer

It can count toward both the agriculture sub-target (18% of ANBC, including its 10% SMF-specific component) and the weaker-sections target (12% of ANBC, since small/marginal farmers are a specified weaker-sections category) simultaneously. This overlap exists because PSL categories are defined by different criteria (sector vs. borrower vulnerability) that can both apply to the same borrower, rather than being mutually exclusive classification buckets.

Practice — Agricultural Marketing, Credit & Rural Finance

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