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Consider the following statements regarding “small finance banks”.
1. Minimum paid-up capital requirement for setting up small finance bank is Rs.100 crores.
2. Foreign shareholding in small finance bank is not allowed.
3. The small finance banks will be required to extend 75 per cent of its net credit to the priority sector lending (PSL).
1. Minimum paid-up capital requirement for setting up small finance bank is Rs.100 crores.
2. Foreign shareholding in small finance bank is not allowed.
3. The small finance banks will be required to extend 75 per cent of its net credit to the priority sector lending (PSL).
Which of the above statement/s is/are correct?
- a)1 and 2 only
- b)2 and 3 only
- c)1 and 3 only
- d)All the above
Correct answer is option 'C'. Can you explain this answer?
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Verified Answer
Consider the following statements regarding “small finance banks...
The objectives of setting up of small finance banks will be to further financial inclusion. Thesmall finance banks will be required to extend 75 per cent of its Adjusted Net Bank Credit(ANBC) to the sectors eligible for classification as priority sector lending (PSL) by the ReserveBank.
The foreign shareholding in the small finance bank would be as per the Foreign DirectInvestment (FDI) policy for private sector banks.
The minimum paid-up equity capital for small finance banks shall be Rs. 100 crore.
Resident individuals/professionals with 10 years of experience in banking and finance; andcompanies and societies owned and controlled by residents will be eligible to set up smallfinance banks. Existing Non-Banking Finance Companies (NBFCs), Micro Finance Institutions(MFIs), and Local Area Banks (LABs) that are owned and controlled by residents can also opt forconversion into small finance banks.
Most Upvoted Answer
Consider the following statements regarding “small finance banks...
The correct answer is option 'C', i.e. statements 1 and 3 are correct.
Explanation:
1. Minimum paid-up capital requirement for setting up small finance bank is Rs.100 crores:
- This statement is correct. As per the guidelines issued by the Reserve Bank of India (RBI), the minimum paid-up capital requirement for setting up a small finance bank is Rs.100 crores.
- Paid-up capital refers to the amount of capital that has been actually received from shareholders in exchange for shares of the company. It is an indicator of the financial strength and stability of the bank.
2. Foreign shareholding in small finance bank is not allowed:
- This statement is incorrect. Foreign shareholding is allowed in small finance banks, but it is subject to certain conditions.
- Initially, the foreign shareholding in small finance banks is restricted to a maximum of 49% of the paid-up capital. However, the RBI may consider higher FDI (Foreign Direct Investment) limits on a case-by-case basis, subject to certain conditions and regulatory approvals.
3. The small finance banks will be required to extend 75 per cent of its net credit to the priority sector lending (PSL):
- This statement is correct. As per the RBI guidelines, small finance banks are required to extend 75% of their net credit to priority sector lending.
- Priority sector lending refers to the lending to specific sectors of the economy that have been identified as priority sectors by the RBI. These sectors include agriculture, micro, small and medium enterprises (MSMEs), education, housing, and others.
- This requirement ensures that small finance banks contribute to the development of the priority sectors and support financial inclusion in the country.
In conclusion, the correct statements regarding small finance banks are that the minimum paid-up capital requirement is Rs.100 crores, and they are required to extend 75% of their net credit to priority sector lending.
Explanation:
1. Minimum paid-up capital requirement for setting up small finance bank is Rs.100 crores:
- This statement is correct. As per the guidelines issued by the Reserve Bank of India (RBI), the minimum paid-up capital requirement for setting up a small finance bank is Rs.100 crores.
- Paid-up capital refers to the amount of capital that has been actually received from shareholders in exchange for shares of the company. It is an indicator of the financial strength and stability of the bank.
2. Foreign shareholding in small finance bank is not allowed:
- This statement is incorrect. Foreign shareholding is allowed in small finance banks, but it is subject to certain conditions.
- Initially, the foreign shareholding in small finance banks is restricted to a maximum of 49% of the paid-up capital. However, the RBI may consider higher FDI (Foreign Direct Investment) limits on a case-by-case basis, subject to certain conditions and regulatory approvals.
3. The small finance banks will be required to extend 75 per cent of its net credit to the priority sector lending (PSL):
- This statement is correct. As per the RBI guidelines, small finance banks are required to extend 75% of their net credit to priority sector lending.
- Priority sector lending refers to the lending to specific sectors of the economy that have been identified as priority sectors by the RBI. These sectors include agriculture, micro, small and medium enterprises (MSMEs), education, housing, and others.
- This requirement ensures that small finance banks contribute to the development of the priority sectors and support financial inclusion in the country.
In conclusion, the correct statements regarding small finance banks are that the minimum paid-up capital requirement is Rs.100 crores, and they are required to extend 75% of their net credit to priority sector lending.
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Consider the following statements regarding “small finance banks”.1. Minimum paid-up capital requirement for setting up small finance bank is Rs.100 crores.2. Foreign shareholding in small finance bank is not allowed.3. The small finance banks will be required to extend 75 per cent of its net credit to the priority sector lending (PSL).Which of the above statement/s is/are correct?a)1 and 2 onlyb)2 and 3 onlyc)1 and 3 onlyd)All the aboveCorrect answer is option 'C'. Can you explain this answer?
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Consider the following statements regarding “small finance banks”.1. Minimum paid-up capital requirement for setting up small finance bank is Rs.100 crores.2. Foreign shareholding in small finance bank is not allowed.3. The small finance banks will be required to extend 75 per cent of its net credit to the priority sector lending (PSL).Which of the above statement/s is/are correct?a)1 and 2 onlyb)2 and 3 onlyc)1 and 3 onlyd)All the aboveCorrect answer is option 'C'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Consider the following statements regarding “small finance banks”.1. Minimum paid-up capital requirement for setting up small finance bank is Rs.100 crores.2. Foreign shareholding in small finance bank is not allowed.3. The small finance banks will be required to extend 75 per cent of its net credit to the priority sector lending (PSL).Which of the above statement/s is/are correct?a)1 and 2 onlyb)2 and 3 onlyc)1 and 3 onlyd)All the aboveCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements regarding “small finance banks”.1. Minimum paid-up capital requirement for setting up small finance bank is Rs.100 crores.2. Foreign shareholding in small finance bank is not allowed.3. The small finance banks will be required to extend 75 per cent of its net credit to the priority sector lending (PSL).Which of the above statement/s is/are correct?a)1 and 2 onlyb)2 and 3 onlyc)1 and 3 onlyd)All the aboveCorrect answer is option 'C'. Can you explain this answer?.
Consider the following statements regarding “small finance banks”.1. Minimum paid-up capital requirement for setting up small finance bank is Rs.100 crores.2. Foreign shareholding in small finance bank is not allowed.3. The small finance banks will be required to extend 75 per cent of its net credit to the priority sector lending (PSL).Which of the above statement/s is/are correct?a)1 and 2 onlyb)2 and 3 onlyc)1 and 3 onlyd)All the aboveCorrect answer is option 'C'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Consider the following statements regarding “small finance banks”.1. Minimum paid-up capital requirement for setting up small finance bank is Rs.100 crores.2. Foreign shareholding in small finance bank is not allowed.3. The small finance banks will be required to extend 75 per cent of its net credit to the priority sector lending (PSL).Which of the above statement/s is/are correct?a)1 and 2 onlyb)2 and 3 onlyc)1 and 3 onlyd)All the aboveCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements regarding “small finance banks”.1. Minimum paid-up capital requirement for setting up small finance bank is Rs.100 crores.2. Foreign shareholding in small finance bank is not allowed.3. The small finance banks will be required to extend 75 per cent of its net credit to the priority sector lending (PSL).Which of the above statement/s is/are correct?a)1 and 2 onlyb)2 and 3 onlyc)1 and 3 onlyd)All the aboveCorrect answer is option 'C'. Can you explain this answer?.
Solutions for Consider the following statements regarding “small finance banks”.1. Minimum paid-up capital requirement for setting up small finance bank is Rs.100 crores.2. Foreign shareholding in small finance bank is not allowed.3. The small finance banks will be required to extend 75 per cent of its net credit to the priority sector lending (PSL).Which of the above statement/s is/are correct?a)1 and 2 onlyb)2 and 3 onlyc)1 and 3 onlyd)All the aboveCorrect answer is option 'C'. Can you explain this answer? in English & in Hindi are available as part of our courses for UPSC.
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