Explain the Reason for the Necessity of Supervision by the Reserve Bank of India of Formal Sources of Loans. - Social Science

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Explain the reason for the necessity of supervision by the Reserve Bank of India of formal sources of loans.

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Solution

The RBI monitors that the banks actually maintain the cash balance. The RBI sees that the banks give loans not just to profit-making businesses and traders but also to small cultivators, small-scale industries, small borrowers, etc. Periodically, banks have to submit information to the RBI on how much they are lending, to whom, at what interest rate, etc.

Concept: Formal Institution - Nationalized Commercial Bank
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