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Which of the following statements is/are correct regarding Small Finance Banks (SFBs)?
1. SFBs are registered as a public limited company under the Companies Act, 2013.
2. They have to mandatorily open at least 25 percent of its banking outlets in unbanked rural centers.
3. RBI recently allowed conversion of SFBs with three years of operation into payment banks.
Select the correct answer using the code given below.
1. SFBs are registered as a public limited company under the Companies Act, 2013.
2. They have to mandatorily open at least 25 percent of its banking outlets in unbanked rural centers.
3. RBI recently allowed conversion of SFBs with three years of operation into payment banks.
Select the correct answer using the code given below.
- a)1 only
- b)1 and 2 only
- c)2 only
- d)2 and 3 only
Correct answer is option 'B'. Can you explain this answer?
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Verified Answer
Which of the following statements is/are correct regarding Small Finan...
- In pursuance of the announcement made in the Union Budget 2014-15, RBI in 2014 has issued draft guidelines for setting up Small Finance Banks in the private sector. The small finance bank shall be registered as a public limited company under the Companies Act, 2013. Small Finance Banks will be licensed under Section 22 of the Banking Regulation Act, 1949 and governed by the provisions of the Banking Regulation Act, 1949; Reserve Bank of India Act, 1934, etc. Hence, statement 1 is correct.
- The objectives of setting up of small finance banks will be for furthering financial inclusion by
(i) Provision of savings vehicles primarily to unserved and underserved sections of the population
(ii) Supply of credit to small business units; small and marginal farmers; micro and small industries; and other unorganized sector entities, through high technology-low cost operations - SFBs can be set up by Resident individuals/professionals, singly or jointly, each having at least 10 years of experience in banking and finance at a senior level; and Companies and Societies in the private sector, that are owned and controlled by residents, and having a successful track record of running their businesses for at least a period of five years.
- Small finance banks will have to subject to the condition that the requirement of opening at least 25 percent of its banking outlets in unbanked rural centers (population up to 9,999 as per the latest census). Hence, statement 2 is correct.
- The small finance banks shall primarily undertake basic banking activities of acceptance of deposits and lending to unserved and underserved sections including small business units, small and marginal farmers, micro and small industries and unorganized sector entities. SFBs can also undertake other non-risk sharing simple financial services activities such as the distribution of mutual fund units, insurance products, pension products, etc. with the prior approval of the RBI and after complying with the requirements of the sectoral regulator for such products.
- The small finance bank will be subject to all prudential norms and regulations of RBI as applicable to existing commercial banks including the requirement of maintenance of Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR). In view of the objectives for which small finance banks are set up, the bank will be required to extend 75 percent of its Adjusted Net Bank Credit (ANBC) to the sectors eligible for classification as priority sector lending (PSL) by RBI.
- Recently RBI allowed Payments Banks to apply for conversion into SFBs after five years of operations if they are otherwise eligible as per these guidelines. Hence, statement 3 is not correct.
Most Upvoted Answer
Which of the following statements is/are correct regarding Small Finan...
Explanation:
Statement 1: SFBs are registered as a public limited company under the Companies Act, 2013.
This statement is correct. Small Finance Banks (SFBs) are registered as a public limited company under the Companies Act, 2013. They are licensed under Section 22 of the Banking Regulation Act, 1949.
Statement 2: They have to mandatorily open at least 25 percent of its banking outlets in unbanked rural centers.
This statement is correct. As per the guidelines issued by the Reserve Bank of India (RBI), Small Finance Banks are required to open at least 25 percent of their banking outlets in unbanked rural centers. This is done to promote financial inclusion and provide banking services to the underserved sections of the population.
Statement 3: RBI recently allowed conversion of SFBs with three years of operation into payment banks.
This statement is incorrect. The RBI has not allowed the conversion of Small Finance Banks (SFBs) with three years of operation into payment banks. Payment banks and Small Finance Banks are two different types of banks with different objectives and functions. Payment banks focus on providing basic banking services like accepting deposits and making payments, while Small Finance Banks cater to the needs of small businesses, micro and small industries, and other unorganized sector entities.
Therefore, the correct answer is option 'B' - 1 and 2 only.
Statement 1: SFBs are registered as a public limited company under the Companies Act, 2013.
This statement is correct. Small Finance Banks (SFBs) are registered as a public limited company under the Companies Act, 2013. They are licensed under Section 22 of the Banking Regulation Act, 1949.
Statement 2: They have to mandatorily open at least 25 percent of its banking outlets in unbanked rural centers.
This statement is correct. As per the guidelines issued by the Reserve Bank of India (RBI), Small Finance Banks are required to open at least 25 percent of their banking outlets in unbanked rural centers. This is done to promote financial inclusion and provide banking services to the underserved sections of the population.
Statement 3: RBI recently allowed conversion of SFBs with three years of operation into payment banks.
This statement is incorrect. The RBI has not allowed the conversion of Small Finance Banks (SFBs) with three years of operation into payment banks. Payment banks and Small Finance Banks are two different types of banks with different objectives and functions. Payment banks focus on providing basic banking services like accepting deposits and making payments, while Small Finance Banks cater to the needs of small businesses, micro and small industries, and other unorganized sector entities.
Therefore, the correct answer is option 'B' - 1 and 2 only.
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Which of the following statements is/are correct regarding Small Finance Banks (SFBs)?1. SFBs are registered as a public limited company under the Companies Act, 2013.2. They have to mandatorily open at least 25 percent of its banking outlets in unbanked rural centers.3. RBI recently allowed conversion of SFBs with three years of operation into payment banks.Select the correct answer using the code given below.a)1 onlyb)1 and 2 onlyc)2 onlyd)2 and 3 onlyCorrect answer is option 'B'. Can you explain this answer?
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Which of the following statements is/are correct regarding Small Finance Banks (SFBs)?1. SFBs are registered as a public limited company under the Companies Act, 2013.2. They have to mandatorily open at least 25 percent of its banking outlets in unbanked rural centers.3. RBI recently allowed conversion of SFBs with three years of operation into payment banks.Select the correct answer using the code given below.a)1 onlyb)1 and 2 onlyc)2 onlyd)2 and 3 onlyCorrect answer is option 'B'. 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 Which of the following statements is/are correct regarding Small Finance Banks (SFBs)?1. SFBs are registered as a public limited company under the Companies Act, 2013.2. They have to mandatorily open at least 25 percent of its banking outlets in unbanked rural centers.3. RBI recently allowed conversion of SFBs with three years of operation into payment banks.Select the correct answer using the code given below.a)1 onlyb)1 and 2 onlyc)2 onlyd)2 and 3 onlyCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following statements is/are correct regarding Small Finance Banks (SFBs)?1. SFBs are registered as a public limited company under the Companies Act, 2013.2. They have to mandatorily open at least 25 percent of its banking outlets in unbanked rural centers.3. RBI recently allowed conversion of SFBs with three years of operation into payment banks.Select the correct answer using the code given below.a)1 onlyb)1 and 2 onlyc)2 onlyd)2 and 3 onlyCorrect answer is option 'B'. Can you explain this answer?.
Which of the following statements is/are correct regarding Small Finance Banks (SFBs)?1. SFBs are registered as a public limited company under the Companies Act, 2013.2. They have to mandatorily open at least 25 percent of its banking outlets in unbanked rural centers.3. RBI recently allowed conversion of SFBs with three years of operation into payment banks.Select the correct answer using the code given below.a)1 onlyb)1 and 2 onlyc)2 onlyd)2 and 3 onlyCorrect answer is option 'B'. 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 Which of the following statements is/are correct regarding Small Finance Banks (SFBs)?1. SFBs are registered as a public limited company under the Companies Act, 2013.2. They have to mandatorily open at least 25 percent of its banking outlets in unbanked rural centers.3. RBI recently allowed conversion of SFBs with three years of operation into payment banks.Select the correct answer using the code given below.a)1 onlyb)1 and 2 onlyc)2 onlyd)2 and 3 onlyCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following statements is/are correct regarding Small Finance Banks (SFBs)?1. SFBs are registered as a public limited company under the Companies Act, 2013.2. They have to mandatorily open at least 25 percent of its banking outlets in unbanked rural centers.3. RBI recently allowed conversion of SFBs with three years of operation into payment banks.Select the correct answer using the code given below.a)1 onlyb)1 and 2 onlyc)2 onlyd)2 and 3 onlyCorrect answer is option 'B'. Can you explain this answer?.
Solutions for Which of the following statements is/are correct regarding Small Finance Banks (SFBs)?1. SFBs are registered as a public limited company under the Companies Act, 2013.2. They have to mandatorily open at least 25 percent of its banking outlets in unbanked rural centers.3. RBI recently allowed conversion of SFBs with three years of operation into payment banks.Select the correct answer using the code given below.a)1 onlyb)1 and 2 onlyc)2 onlyd)2 and 3 onlyCorrect answer is option 'B'. Can you explain this answer? in English & in Hindi are available as part of our courses for UPSC.
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