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Correct Answer :   1 only


The Reserve Bank of India (RBI)-appointed director, recently resigned from the board of Ujjivan Small Finance Bank (SFB).

About Small Finance Banks (SFBs) :

SFBs are specialized banks that are licensed by RBI to provide financial services and products to low-income individuals and underserved communities, including microfinance and micro-enterprise services, as well as other basic banking services.

Aim :

* To provide financial inclusion to these segments of the population who are often excluded from the traditional banking system.

* SFBs help them to have access to financial products such as small loans, savings, insurance, and other basic banking services.

* SFBs are registered as public limited companies under the Companies Act, 2013 and governed by Banking Regulations Act, 1949; RBI Act, 1934 and other relevant Statutes and Directives from time to time.

The guidelines for SFBS were introduced in 2014 by RBI. RBI Guidelines on SFBs in India are :

* SFBs are granted the scheduled bank status after being operational and are deemed suitable under section 42 of the RBI Act,1934.

* SFBs are required to primarily focus on providing access to financial services to the unbanked and underbanked segments of the population.

* They are required to maintain a minimum Capital to Risk-Weighted Assets Ratio (CRAR) of 15%.

* They are required to extend 75% of their Adjusted Net Bank Credit to Priority Sector Lending.

* SFBs are required to open at least 25% of their total branches in unbanked rural areas.

* The minimum paid-up voting equity capital for small finance banks shall be Rs.200 crore.

* SFBs are required to maintain at least 50% of their loan portfolio as microfinance and advances of up to Rs. 25,00,000.

* SFBs are required to comply with various prudential norms and regulations related to income recognition, asset classification, and provisioning.

* SFBs are encouraged to adopt technology to improve their operational efficiency and reach the target segments.

RBI nominee PN Raghunath steps down from Ujjivan SFB board before scheduled term end.

Source : CNBC

Published On : June 2, 2023
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