Question

Assertion (A): The unorganized sector of the money market lacks transparency.

Reasoning (R): Activities of the unorganized sector are largely confined to rural areas.

Options

• (A) is True, but (R) is False

• (A) is False, but (R) is True

• Both (A) and (R) are True and (R) is the correct explanation of (A)

• Both (A) and (R) are True and (R) is not the correct explanation of (A)

Answer 1

Both (A) and (R) are True and (R) is not the correct explanation of (A)

Explanation:

The Assertion (A) is true because the unorganized money market works informally outside the direct control or regulatory supervision of the Reserve Bank of India (RBI), resulting in secret accounts and a complete lack of transparency. The reasoning (R) is also true because indigenous financial operations and local money lenders are primarily active and concentrated in rural areas. However, (R) is not the correct explanation for (A), because the sector’s lack of transparency stems from its unregulated and non-standardized operational structure, not its geographical location.