{"id":11342,"date":"2024-04-27T07:06:12","date_gmt":"2024-04-27T01:36:12","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=11342"},"modified":"2025-10-01T11:59:16","modified_gmt":"2025-10-01T06:29:16","slug":"what-are-small-finance-banks-sfbs","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/what-are-small-finance-banks-sfbs\/","title":{"rendered":"Small Finance Bank"},"content":{"rendered":"<h2>About Small Finance Bank<\/h2>\n<ul>\n<li>SFBs are specialized banks that are licensed by RBI to provide <strong>financial services<\/strong> and products to <strong>low-income individuals<\/strong> and <strong>underserved communities<\/strong>, including microfinance and micro-enterprise services, as well as other basic banking services.\u00a0<\/li>\n<li>SFBs are granted the <strong>scheduled bank status<\/strong> after being operational and are deemed suitable <strong>under section 42 of the RBI Act, 1934.<\/strong><\/li>\n<li><strong>Objectives<\/strong>\n<ul>\n<li>To provide <strong>financial inclusion<\/strong> to these segments of the population who are often excluded from the traditional banking system.<\/li>\n<li>SFBs help them to have <strong>access to financial products<\/strong> such as small loans, savings, insurance, and other basic banking services.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Eligibility<\/strong>\n<ul>\n<li><strong>Resident individuals\/professionals<\/strong> (Indian citizens), singly or jointly, each having at least <strong>10 years of experience<\/strong> in banking and finance at a senior level are eligible for SFBs.<\/li>\n<li>Companies and Societies in the private sector, that is owned and controlled by residents and having successful track record of running their businesses for at least a period of five years.\n<ul>\n<li>Existing <a href=\"https:\/\/vajiramandravi.com\/current-affairs\/what-is-a-non-banking-financial-company-nbfc\/\" target=\"_blank\">Non-Banking Finance Companies (NBFCs)<\/a>, Micro Finance Institutions (MFIs), and <strong>Local Area Banks<\/strong> (LABs) in the private sector, that are controlled by residents and having successful track record of running their businesses for at least a period of five years, can also opt for conversion into small finance banks after complying with all legal and regulatory requirements of various authorities.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<li><strong>Other norms to be followed by SFBs<\/strong>\n<ul>\n<li><strong>Capital to Risk Weighted Assets Ratio:<\/strong> They are required to maintain a minimum CRAR of 15%.<\/li>\n<li><strong>Priority Sector Lending:<\/strong> They are required to extend 75% of their Adjusted Net Bank Credit to Priority Sector Lending.<\/li>\n<li>SFBs are required to open at <strong>least 25%<\/strong> of their total branches in unbanked rural areas.<\/li>\n<li><strong>Required paid up capital:<\/strong> The minimum paid-up voting equity capital for small finance banks shall be <strong>Rs.200 crore.<\/strong><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><strong>Regulation: <\/strong>SFBs are registered as public limited companies under the <strong>Companies Act, 2013<\/strong> and governed by <strong>Banking Regulations Act, 1949<\/strong>; <strong>RBI Act, 1934<\/strong> and other relevant Statutes and Directives from time to time.<\/p>\n<hr \/>\n<h3>Q1: What is a Non-Banking Financial Company?<\/h3>\n<p>An NBFC is a company registered under the Companies Act 1956 engaged in the business of loans and advances, acquisition of shares\/stocks\/bonds\/debentures\/securities issued by the Government or local authority or other marketable securities of a like nature.<\/p>\n<p><strong>Source: <\/strong><a href=\"https:\/\/indianexpress.com\/article\/business\/banking-and-finance\/small-finance-banking-universal-banks-rbi-circular-9292920\/\" target=\"_blank\" rel=\"nofollow noopener\">SFBs should be worth Rs 1,000 cr to become universal banks, says RBI<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Small Finance Bank are specialized banks that are licensed by RBI to provide financial services and products to low-income individuals and underserved communities.<\/p>\n","protected":false},"author":5,"featured_media":11343,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":{"0":"post-11342","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-prelims-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/11342","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=11342"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/11342\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/11343"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=11342"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=11342"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=11342"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}