Which among the following banks is associated with granting loans to small farmers and laborers so that they can start farming activities?

Appeared in: DSSSB - 29 August 2019 (Shift-2)

Explanation

Regional Rural Banks (RRBs) were established in 1975 with the explicit objective of providing credit and other banking facilities to the rural sector.
The primary target group for RRBs includes small and marginal farmers, agricultural laborers, artisans, and small entrepreneurs in rural areas.
They were created to bridge the credit gap in rural India and ensure that financial services reach the grassroots level.
RRBs have a localized operational area, typically limited to a few districts, allowing them to have a better understanding of the needs of the local population.

Option A: State Bank of India (SBI) is a large, public-sector commercial bank. While it does provide agricultural loans as part of its priority sector lending obligations, its primary mandate is not exclusively focused on small farmers and rural laborers.
Option B: The National Bank for Agriculture and Rural Development (NABARD) is an apex development financial institution. It does not lend directly to individuals. Instead, it provides refinance facilities to RRBs, cooperative banks, and commercial banks to support their lending activities in rural areas.
Option D: The Reserve Bank of India (RBI) is the country's central bank. Its functions include regulating the banking system, managing monetary policy, and issuing currency. It does not engage in commercial banking activities like providing loans to the public.

Clinical Relevance

Nursing practice connection: This is primarily an exam-oriented knowledge point with limited direct bedside application, so retain Rural Credit Institutions in India as background academic context rather than a clinical decision trigger.
Access to formal credit via institutions like RRBs is crucial for improving the socio-economic status of small farmers, helping them break free from the clutches of informal moneylenders who charge exorbitant interest rates.
Timely and adequate credit allows farmers to invest in better inputs like high-yield seeds, fertilizers, and modern equipment, which boosts agricultural productivity and contributes to national food security.
The financial inclusion promoted by RRBs empowers rural communities, reduces poverty, and stimulates economic development from the grassroots level.

How to Approach the Question

First, carefully read the question to identify the key requirements. The question specifically asks for the bank that grants loans to 'small farmers and laborers' for 'farming activities'.
Next, analyze the function of each financial institution listed in the options.
Evaluate SBI: It's a commercial bank, but is it specifically for small farmers? No, its scope is much broader.
Evaluate NABARD: Recall or deduce its role. It's an apex 'refinancing' bank, not a direct lender to individuals.
Evaluate RRB: The name itself, 'Regional Rural Bank,' suggests a focus on rural areas. Its primary purpose is to serve the rural sector, including small farmers.
Evaluate RBI: This is the central bank, which sets policy and regulates other banks but doesn't deal with the public directly.

Concept Tested & Keywords

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E6 Applied Sociology for Nurses TK Indrani p. 123-125

Practise the full DSSSB - 29 August 2019 (Shift-2)

Attempt every question from this paper in a timed mock, then review the full solution for each one.