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 :
Show answer
Answer: A. Under the RBI's 2014 guidelines, Small Finance Banks aim at financial inclusion through savings services and credit supply to small business units, small and marginal farmers, micro and small industries and the unorganised sector. Statements 1 and 2 match this. Statement 3 is not a stated purpose: helping young entrepreneurs in rural areas is not part of the SFB mandate. So 1 and 2 only.
Watch for: Watch for statement 3. It sounds like a good inclusion goal, but it is not in the RBI's stated objectives.
Why the other options are wrong
- B. Wrong because statement 3 is not an objective of SFBs.
- C. Wrong because small and marginal farmers are covered, while young rural entrepreneurs are not.
- D. Wrong because statement 3 is not in the RBI guidelines.
Source to check: RBI, 'Guidelines for Licensing of Small Finance Banks in the Private Sector', 27 November 2014 (rbi.org.in)
Answer from the official UPSC key. Written and fact-checked by AI against the official key. Spotted a mistake? Report it.