Discussion
The importance of SFls may be attributed to
Answer: D
Correct answer: All of the above
All three describe the contribution of the specialised financial institutions. They have been an important source of long-term finance to industry, filling the gap left by commercial banks whose deposits are short-term. They have supported small-scale industry and projects in backward areas, often on concessional terms under regional development policy.
And they have backed new and small entrepreneurs who lacked the collateral and track record commercial lenders require. That developmental role - accepting risk and long tenor the market would not - is precisely why they were created rather than left to the banks.
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