With reference to Rural Infrastructure Development Fund RIDF consider the following statements 1 The...........

Economic Affairs Types of Banks and Banking

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With reference to Rural Infrastructure Development Fund (RIDF), consider the following statements:

1. The shortfalls in the priority sector lending of both foreign banks and public sector banks are deposited in RIDF.

2. It is maintained by the National Bank for Agriculture and Rural Development (NABARD).

Which of the statements given above is/are correct?

1 only

2 only

Both 1 and 2

Neither 1 nor 2

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Explanation:

Statement 1 is not correct. Domestic commercial banks both Public and Private contribute to the RIDF to the extent of their shortfall in stipulated priority sector lending to agriculture. The main objective of the Fund is to provide loans to State Governments and State-owned corporations to enable them to complete ongoing rural infrastructure projects. The foreign banks having shortfall in lending to stipulated priority sector target/sub-targets are required to contribute to Small Enterprises Development Fund (SEDF) to be set up by Small Industries Development Bank of India (SIDBI).
o Statement 2 is correct. The RIDF was set up by the Government in 1995-96 for financing ongoing rural Infrastructure projects. The fund is maintained by the National Bank for Agriculture and Rural Development (NABARD).