UPSC Prelims 2004 Q47: Indian Economy – Banking & Financial Sector
Consider the following statements:
1. The National Housing Bank, the apex institution of housing finance in India, was set up as a
wholly - owned subsidiary of the Reserve Bank of India.
2. The Small Industries Development Bank of India was established as a wholly - owned subsidiary
of the Industrial Development Bank of India.
Which of the statements given above is/are correct?
- (a) 1 only
- (b) 2 only
- (c) Both 1 and 2
- (d) Neither 1 nor 2
Answer: (c) Both 1 and 2
Explanation
National Housing Bank and SIDBI
| Statement | Verdict |
|---|---|
| 1. NHB set up as a wholly owned subsidiary of the RBI | True — 1988 |
| 2. SIDBI set up as a wholly owned subsidiary of IDBI | True — 1990 |
Both statements are correct: the National Housing Bank was set up in 1988 as a wholly owned subsidiary of the Reserve Bank of India, and the Small Industries Development Bank of India was set up in 1990 as a wholly owned subsidiary of the Industrial Development Bank of India.
Answer: (c) Both 1 and 2.
Why each option is right or wrong
- (a) Incorrect. Statement 2 is also correct.
- (b) Incorrect. Statement 1 is also correct.
- (c) CORRECT. Both statements are correct.
- (d) Incorrect. Both statements are correct.
Key point
NHB: 1988, RBI. SIDBI: 1990, IDBI. NABARD: 1982, RBI.
Remember
NHB is a subsidiary of the RBI; SIDBI was a subsidiary of IDBI.
Common mistakes
- Thinking NHB was set up under the Finance Ministry.
- Mixing SIDBI's parent institution with the SBI.
- Forgetting that SIDBI is an apex institution for small industries.
Exam tip
Apex financial institutions: NABARD (agriculture), NHB (housing), SIDBI (small industry), EXIM (trade).
Sources
- National Housing Bank Act, 1987
- Small Industries Development Bank of India Act, 1989
- National Bank for Agriculture and Rural Development Act, 1981