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Consider the following statements regarding Small Finance Banks (SFBs):
- They are required to extend 75% of their Adjusted Net Bank Credit to Priority Sector Lending.
- SFBs are required to open at least 50% of their total branches in unbanked rural areas.
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
Correct answer is option 'A'. Can you explain this answer?
Most Upvoted Answer
Consider the following statements regarding Small Finance Banks (SFBs)...
Small Finance Banks (SFBs) - Priority Sector Lending and Branches in Rural Areas
Priority Sector Lending:
- Small Finance Banks (SFBs) are required to extend 75% of their Adjusted Net Bank Credit to Priority Sector Lending.
- The priority sectors include agriculture, micro, small and medium enterprises (MSMEs), education, housing, export credit, social infrastructure, renewable energy, and others.
- The aim of this requirement is to ensure that SFBs contribute to the development of these sectors and promote financial inclusion.
Branches in Rural Areas:
- SFBs are required to open at least 25% of their total branches in unbanked rural areas.
- In addition, SFBs are required to comply with the Reserve Bank of India's (RBI) guidelines on financial inclusion and provide banking services to underserved areas and populations.
- The aim of this requirement is to promote financial inclusion and provide banking services to those who do not have access to formal banking.
Correct Answer:
- Statement 1 is correct.
- Statement 2 is incorrect as the correct statement is that SFBs are required to open at least 25% of their total branches in unbanked rural areas, not 50%. Therefore, the correct answer is option 'A' - 1 only.
Priority Sector Lending:
- Small Finance Banks (SFBs) are required to extend 75% of their Adjusted Net Bank Credit to Priority Sector Lending.
- The priority sectors include agriculture, micro, small and medium enterprises (MSMEs), education, housing, export credit, social infrastructure, renewable energy, and others.
- The aim of this requirement is to ensure that SFBs contribute to the development of these sectors and promote financial inclusion.
Branches in Rural Areas:
- SFBs are required to open at least 25% of their total branches in unbanked rural areas.
- In addition, SFBs are required to comply with the Reserve Bank of India's (RBI) guidelines on financial inclusion and provide banking services to underserved areas and populations.
- The aim of this requirement is to promote financial inclusion and provide banking services to those who do not have access to formal banking.
Correct Answer:
- Statement 1 is correct.
- Statement 2 is incorrect as the correct statement is that SFBs are required to open at least 25% of their total branches in unbanked rural areas, not 50%. Therefore, the correct answer is option 'A' - 1 only.
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Community Answer
Consider the following statements regarding Small Finance Banks (SFBs)...
The Reserve Bank of India (RBI)-appointed director, recently resigned from the board of Ujjivan Small Finance Bank (SFB).
About Small Finance Banks (SFBs):
- SFBs are specialized banks that are licensed by RBI to provide financial services and products to low-income individuals and underserved communities, including microfinance and micro-enterprise services, as well as other basic banking services.
- Aim:
- To provide financial inclusion to these segments of the population who are often excluded from the traditional banking system.
- SFBs help them to have access to financial products such as small loans, savings, insurance, and other basic banking services.
- SFBs are registered as public limited companies under the Companies Act, 2013 and governed by Banking Regulations Act, 1949; RBI Act, 1934 and other relevant Statutes and Directives from time to time.
- The guidelines for SFBS were introduced in 2014 by RBI. RBI Guidelines on SFBs in India are:
- SFBs are granted the scheduled bank status after being operational and are deemed suitable under section 42 of the RBI Act,1934.
- SFBs are required to primarily focus on providing access to financial services to the unbanked and underbanked segments of the population.
- They are required to maintain a minimum Capital to Risk-Weighted Assets Ratio (CRAR) of 15%.
- They are required to extend 75% of their Adjusted Net Bank Credit to Priority Sector Lending.
- SFBs are required to open at least 25% of their total branches in unbanked rural areas.
- The minimum paid-up voting equity capital for small finance banks shall be Rs.200 crore.
- SFBs are required to maintain at least 50% of their loan portfolio as microfinance and advances of up to Rs. 25,00,000.
- SFBs are required to comply with various prudential norms and regulations related to income recognition, asset classification, and provisioning.
- SFBs are encouraged to adopt technology to improve their operational efficiency and reach the target segments.
Hence only statement 1 is correct.
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Consider the following statements regarding Small Finance Banks (SFBs): They are required to extend 75% of their Adjusted Net Bank Credit to Priority Sector Lending. SFBs are required to open at least 50% of their total branches in unbanked rural areas.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'A'. Can you explain this answer?
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Consider the following statements regarding Small Finance Banks (SFBs): They are required to extend 75% of their Adjusted Net Bank Credit to Priority Sector Lending. SFBs are required to open at least 50% of their total branches in unbanked rural areas.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'A'. Can you explain this answer? for UPSC 2025 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 (SFBs): They are required to extend 75% of their Adjusted Net Bank Credit to Priority Sector Lending. SFBs are required to open at least 50% of their total branches in unbanked rural areas.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements regarding Small Finance Banks (SFBs): They are required to extend 75% of their Adjusted Net Bank Credit to Priority Sector Lending. SFBs are required to open at least 50% of their total branches in unbanked rural areas.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'A'. Can you explain this answer?.
Consider the following statements regarding Small Finance Banks (SFBs): They are required to extend 75% of their Adjusted Net Bank Credit to Priority Sector Lending. SFBs are required to open at least 50% of their total branches in unbanked rural areas.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'A'. Can you explain this answer? for UPSC 2025 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 (SFBs): They are required to extend 75% of their Adjusted Net Bank Credit to Priority Sector Lending. SFBs are required to open at least 50% of their total branches in unbanked rural areas.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements regarding Small Finance Banks (SFBs): They are required to extend 75% of their Adjusted Net Bank Credit to Priority Sector Lending. SFBs are required to open at least 50% of their total branches in unbanked rural areas.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'A'. Can you explain this answer?.
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