Question
The Contribution towards priority sector lending is
based on __________ , while the cash reserve ratio is based on __________.Solution
The contribution towards priority sector lending is based on Adjusted Net Bank Credit (ANBC), while the Cash Reserve Ratio (CRR) is based on Net Demand and Time Liabilities (NDTL). Â Adjusted Net Bank Credit (ANBC) is the sum of the bank's net demand and time liabilities and is used as a benchmark for calculating the priority sector lending targets for banks in India. On the other hand, Net Demand and Time Liabilities (NDTL) is a measure of the deposits held by a bank that are available for withdrawal on demand or after a specified time period. CRR is the percentage of NDTL that banks are required to maintain as a reserve with the Reserve Bank of India (RBI) to ensure liquidity in the banking system. 
 
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