Answer: Option C
Answer: (c)
The objectives of setting up small finance banks are
to promote financial inclusion by providing provision of savings vehicles and supply of credit to small business units;
small and marginal farmers; micro and small industries; and other unorganized sector entities, through high technology-low cost operations.
They are required to extend 75% of their loans to priority sectors and 50% of their loan portfolio shall constitute loans of up to 25 lacs.
The scope of activities for small finance banks will be,
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 unorganized sector entities and there will not be any restriction in the area of operations.
They will be required to maintain CRR and SLR. They will be set up as differentiated banks for serving niche interests
Small Finance Banks are not particularly for rural areas.
RBI released guidelines for 'on-tap' licensing of Small Finance Banks. Urban Cooperative Banks and Payment Banks can apply for conversion into SFB.
‘On-tap’ means any time they can apply for conversion into SFB and they don’t need to wait for a time window when RBI will grant licenses.