Question

Given below are two statements:
Statement (I) : After the establishment of NABARD, the Rural Credit Department as well as Rural Planning Cell of the RBI were closed.
Statement (II) : In 2005, the Reserve Bank of India introduced the micro-finance programme for improving the access of rural poor to formal institutional credit as a pilot testing project.
In light of the above statements, choose the most appropriate answer from the options given below:

• A. Both Statement (I) and Statement (II) are correct.
• B. Both Statement (I) and Statement (II) are incorrect.
• C. Statement (I) is correct but Statement (II) is incorrect.
• D. Statement (I) is incorrect but Statement (II) is correct.

Hint:

- Remember that NABARD absorbed the rural credit functions of the RBI in 1982.
- The SHG-Bank Linkage pilot project was initiated by NABARD in 1992, which is a key milestone in micro-finance history.

Answer 1

The Correct Option is C

Step 1: Understanding the Concept:
The establishment of the National Bank for Agriculture and Rural Development (NABARD) in 1982 led to a reorganization of rural credit departments in the Reserve Bank of India (RBI).

Step 2: Detailed Explanation:
Let us evaluate each statement:
- Statement (I):
Upon the recommendation of the CRAFICARD Committee, NABARD was established on July 12, 1982.
To consolidate rural credit operations, the RBI transferred the entire functions of the Agricultural Credit Department (ACD) and the Rural Planning and Credit Cell (RPCC) to the newly created NABARD.
As a result, these specific rural departments ceased to operate within the RBI.
Therefore, Statement (I) is correct.
- Statement (II):
The Self-Help Group (SHG) - Bank Linkage Programme, which is India's flagship micro-finance initiative, was launched as a pilot project by NABARD, not the RBI, in the year 1992, not 2005.
Therefore, Statement (II) is incorrect.
Statement (I) is correct but Statement (II) is incorrect.

Step 3: Final Answer:
The correct option is (C).