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Consider the following statements about Small Finance Banks (SFBs)
1. They are required to maintain a minimum Capital to Risk-Weighted Assets Ratio (CRAR) of 15%.
2. They are required to extend 75% of their Adjusted Net Bank Credit to Priority Sector Lending.
3. SFBs are required to open at least 25% of their total branches in unbanked rural areas.
Q. How many of the statements given above are correct?
1. They are required to maintain a minimum Capital to Risk-Weighted Assets Ratio (CRAR) of 15%.
2. They are required to extend 75% of their Adjusted Net Bank Credit to Priority Sector Lending.
3. SFBs are required to open at least 25% of their total branches in unbanked rural areas.
Q. How many of the statements given above are correct?
- a)Only One
- b)Only Two
- c)All Three
- d)None
Correct answer is option 'C'. Can you explain this answer?
Verified Answer
Consider the following statements about Small Finance Banks (SFBs)1.Th...
Statement Analysis
Option c is Correct
SFBs are specialized banks that are licensed by RBIto 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.
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:
Option c is Correct
SFBs are specialized banks that are licensed by RBIto 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.
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.
Context: The Reserve Bank of India (RBI)-appointed director, recently resigned from the board of Ujjivan Small Finance Bank (SFB).
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Most Upvoted Answer
Consider the following statements about Small Finance Banks (SFBs)1.Th...
Overview of Small Finance Banks (SFBs)
Small Finance Banks (SFBs) are a type of niche banking institution in India aimed at promoting financial inclusion by providing banking services to underserved sectors. Let's analyze the statements regarding their operational requirements.
Statement 1: CRAR Requirement
- SFBs are mandated to maintain a minimum Capital to Risk-Weighted Assets Ratio (CRAR) of 15%. This requirement ensures that these banks have sufficient capital to absorb potential losses and maintain stability.
Statement 2: Priority Sector Lending
- SFBs are required to extend at least 75% of their Adjusted Net Bank Credit to Priority Sector Lending (PSL). This is a crucial aspect as it reflects their role in promoting lending to sectors like agriculture, micro, small, and medium enterprises (MSMEs), which are vital for economic growth.
Statement 3: Branch Opening in Rural Areas
- SFBs must open at least 25% of their total branches in unbanked rural areas. This requirement is aimed at enhancing access to banking services in rural regions, thereby contributing to financial inclusion.
Conclusion
- All three statements are correct. Therefore, the correct answer to the question is option 'C' – All Three statements are true.
These regulations emphasize the role of SFBs in fostering financial inclusion while ensuring their financial stability and commitment to serving priority sectors.
Small Finance Banks (SFBs) are a type of niche banking institution in India aimed at promoting financial inclusion by providing banking services to underserved sectors. Let's analyze the statements regarding their operational requirements.
Statement 1: CRAR Requirement
- SFBs are mandated to maintain a minimum Capital to Risk-Weighted Assets Ratio (CRAR) of 15%. This requirement ensures that these banks have sufficient capital to absorb potential losses and maintain stability.
Statement 2: Priority Sector Lending
- SFBs are required to extend at least 75% of their Adjusted Net Bank Credit to Priority Sector Lending (PSL). This is a crucial aspect as it reflects their role in promoting lending to sectors like agriculture, micro, small, and medium enterprises (MSMEs), which are vital for economic growth.
Statement 3: Branch Opening in Rural Areas
- SFBs must open at least 25% of their total branches in unbanked rural areas. This requirement is aimed at enhancing access to banking services in rural regions, thereby contributing to financial inclusion.
Conclusion
- All three statements are correct. Therefore, the correct answer to the question is option 'C' – All Three statements are true.
These regulations emphasize the role of SFBs in fostering financial inclusion while ensuring their financial stability and commitment to serving priority sectors.
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Consider the following statements about Small Finance Banks (SFBs)1.They are required to maintain a minimum Capital to Risk-Weighted Assets Ratio (CRAR) of 15%.2. They are required to extend 75% of their Adjusted Net Bank Credit to Priority Sector Lending.3. SFBs are required to open at least 25% of their total branches in unbanked rural areas.Q. How many of the statements given above are correct?a)Only Oneb)Only Twoc)All Threed)NoneCorrect answer is option 'C'. Can you explain this answer?
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Consider the following statements about Small Finance Banks (SFBs)1.They are required to maintain a minimum Capital to Risk-Weighted Assets Ratio (CRAR) of 15%.2. They are required to extend 75% of their Adjusted Net Bank Credit to Priority Sector Lending.3. SFBs are required to open at least 25% of their total branches in unbanked rural areas.Q. How many of the statements given above are correct?a)Only Oneb)Only Twoc)All Threed)NoneCorrect answer is option 'C'. 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 about Small Finance Banks (SFBs)1.They are required to maintain a minimum Capital to Risk-Weighted Assets Ratio (CRAR) of 15%.2. They are required to extend 75% of their Adjusted Net Bank Credit to Priority Sector Lending.3. SFBs are required to open at least 25% of their total branches in unbanked rural areas.Q. How many of the statements given above are correct?a)Only Oneb)Only Twoc)All Threed)NoneCorrect answer is option 'C'. 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 about Small Finance Banks (SFBs)1.They are required to maintain a minimum Capital to Risk-Weighted Assets Ratio (CRAR) of 15%.2. They are required to extend 75% of their Adjusted Net Bank Credit to Priority Sector Lending.3. SFBs are required to open at least 25% of their total branches in unbanked rural areas.Q. How many of the statements given above are correct?a)Only Oneb)Only Twoc)All Threed)NoneCorrect answer is option 'C'. Can you explain this answer?.
Consider the following statements about Small Finance Banks (SFBs)1.They are required to maintain a minimum Capital to Risk-Weighted Assets Ratio (CRAR) of 15%.2. They are required to extend 75% of their Adjusted Net Bank Credit to Priority Sector Lending.3. SFBs are required to open at least 25% of their total branches in unbanked rural areas.Q. How many of the statements given above are correct?a)Only Oneb)Only Twoc)All Threed)NoneCorrect answer is option 'C'. 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 about Small Finance Banks (SFBs)1.They are required to maintain a minimum Capital to Risk-Weighted Assets Ratio (CRAR) of 15%.2. They are required to extend 75% of their Adjusted Net Bank Credit to Priority Sector Lending.3. SFBs are required to open at least 25% of their total branches in unbanked rural areas.Q. How many of the statements given above are correct?a)Only Oneb)Only Twoc)All Threed)NoneCorrect answer is option 'C'. 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 about Small Finance Banks (SFBs)1.They are required to maintain a minimum Capital to Risk-Weighted Assets Ratio (CRAR) of 15%.2. They are required to extend 75% of their Adjusted Net Bank Credit to Priority Sector Lending.3. SFBs are required to open at least 25% of their total branches in unbanked rural areas.Q. How many of the statements given above are correct?a)Only Oneb)Only Twoc)All Threed)NoneCorrect answer is option 'C'. Can you explain this answer?.
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