Question

Q. Consider the following in reference to Small Finance Banks (SFBs):

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

Answer 1

The correct option is C Both 1 and 2

Explanation:

• Statement 1 is correct: The small finance bank shall be registered as a public limited company under the Companies Act, 2013. 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). The bank 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 RBI. While 40 per cent of its ANBC should be allocated to different sub-sectors under PSL as per the extant PSL prescriptions, the bank can allocate the balance of 35 per cent to any one or more sub-sectors under the PSL where it has a competitive advantage.
• Statement 2 is correct: After the small finance bank reaches the net worth of Rs.500 crore, the listing will be mandatory within three years of reaching that net worth. Small finance banks having a net worth of below Rs.500 crore could also get their shares listed voluntarily, subject to fulfilment of the requirements of the capital markets regulator.