Small Finance Banks

About Finance Banks:

They are niche banks that focus on and serve the needs of a certain demographic segment of the population.
The objectives of setting up of small finance banks will be to further financial inclusion by
- the provision of savings vehicles
- supply of credit to small business units; small and marginal farmers; micro and small industries; and other unorganised sector entities,
- through high technology-low cost operations.
SFBs was recommended by the Nachiket Mor committee on financial inclusion.

Scope of activities of SFBs

Small finance banks 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 unorganised sector entities.

Criteria for setting up SFBs

Individuals/professions with 10 years of experience in finance, Non-Banking Financial Companies (NBFCs), micro finance companies, local area banks are eligible to set up SFBs.
The minimum paid-up equity capital for small finance banks shall be Rs. 100 crore.
The promoter’s minimum initial contribution to the paid-up equity capital shall at least be 40% and gradually brought down to 26% within 12 years from the date of commencement of business of the bank.
The small finance banks will be required to extend 75% of its Adjusted Net Bank Credit to the sectors eligible for classification as priority sector lending (PSL) by the Reserve Bank.
SFBs have to maintain Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) as per RBI norms.
At least 50% of its loan portfolio should constitute loans and advances of up to Rs. 25 lakh.

What can Small Finance Banks do?

Sell forex to customers.
Sell mutual funds, insurance and pensions.
Can convert into a full-fledged bank.

What Small Finance Banks can’t do?

Extend large loans.
Cannot float subsidiaries
Deal in sophisticated products.

Source: TH

Join Our Telegram

Voice clone-AI

Pradhan Mantri Suryodaya Yojana

06 Feb, 24
SHARE

Recently, Prime Minister announced Pradhan Mantri Suryodaya Yojana under which 1 crore households will get rooftop solar power systems. India’s Status of Current Solar Capacity India currently stands at 4th place globally in solar power capacity. As per Ministry of New an

Foreign Contribution Regulation Act (FCRA)- NGO

06 Feb, 24
SHARE

The Foreign Contribution Regulation Act, 2010 (FCRA) registration of two prominent non-governmental organisations (NGOs) — Centre for Policy Research (CPR) and World Vision India (WVI) have been cancelled this month. What is FCRA? Key provisions of FCRA, 2010 Key aspects Description

Voice clone-AI

06 Feb, 24
SHARE

Voice clone fraud has been on the rise in India. AI voice cloning – It is the process of creating a synthetic replica of a person’s voice through machine learning and speech synthesis technology.It is called as voice deepfakesor audio deepfakes. Objective – To achieve a high level of na

Science communication- how to promote

06 Feb, 24
SHARE

Steps taken by India to promote Science Communication Publications and Information Directorate (PID) - An organisation under Council of Science and Industrial Research (CSIR) established in 1951 for publishing and disseminating scientific information in India. National science magazines- The PI

Universal Basic Income (UBI)- Analysis

05 Feb, 24
SHARE

Universal Basic Income (UBI) can strengthen welfare architecture and unlock the nation’s latent demographic potential. UBI - It is an income support mechanism typically intended to reach all or a very large portion of the population regardless of their earnings or employment status. Objective- To provide enough to co