Question

Q. Consider the following statements about “Small Finance Banks” in India:

Which of the above given statements are correct?

• A. 1 and 2 only
• B. 2 and 3 only
• C. 1 and 3 only
• D. 1, 2 and 3

Answer 1

The correct option is C 1 and 3 only

Explanation:

Statements 1 and 3 are correct: The Small Finance Bank (SFB) is a type of differentiated banks whose main purpose is to promote financial inclusion in the nation by primarily undertaking basic banking activities of acceptance of deposits and lending to un-served and underserved sections including small business units, small and marginal farmers, micro and small industries and unorganised sector entities, but without any restriction in the area of operations.

Statement 2 is incorrect: To set up the SFBs, the minimum capital for small finance banks shall be Rs.200 crore, except for such small finance banks which are converted from UCBs for which the capital requirement shall be Rs.100 crore from the date of commencement of business. However, they will have to increase their minimum net worth to Rs.200 crore within five years from the date of commencement of business.