| What is the purpose of setting up of Small Finance Banks (SFBs) in India? |
| 1. To supply credit to small business units |
| 2. To supply credit to small and marginal farmers |
| 3. To encourage young entrepreneurs to set-up business particularly in rural areas. |
| Select the correct answer using the code given below: |
A) 1 and 2
B) 2 and 3
C) 1 and 3
D) 1, 2 and 3
Correct Answer: A
Solution :
Exp. [a] The objective of small finance banks is to further financial inclusion by providing: Basic banking facilities to the unbanked and thereby boosting saving habits and 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. For the first three years, 25% of branches should be in unbanked rural areas. Of the loans issued by Small Banks, 75% should be to the so-called priority sector which includes agriculture and small businesses. And half the loan portfolio of the banks should be loans and advances of up to Rs. 25 lakh to micro finance businesses.
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