Economics • Banking & FinanceMedium
In the context of rural banking in Punjab, what is the primary structural function of Primary Agricultural Credit Societies operating at the village level?
A. To provide short-term and medium-term agricultural credit directly to rural farmers✓ Correct Answer
B. To regulate foreign exchange reserves and set the repo rate for commercial transactions
C. To underwrite corporate Initial Public Offerings for heavy manufacturing industries
D. To issue sovereign currency notes on behalf of the Central Government
💡 Solution & Explanation
Primary Agricultural Credit Societies form the base tier of the short-term cooperative credit structure, disbursing direct agricultural loans and distributing farm inputs at the village level. Regulating repo rates is the exclusive mandate of the Reserve Bank of India. Underwriting corporate initial public offerings is handled by merchant bankers and stock exchanges. Currency issuance is restricted to the central bank under the Reserve Bank of India Act.
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