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RBI doubles Minimum Capital Requirement to Rs 200 cr for SFBs

Published on January 10, 2024
Current Context: The Reserve Bank of India (RBI) has indeed doubled the minimum capital requirement for Small Finance Banks (SFBs) to Rs 200 crore. This move is part of the revised guidelines issued by the RBI.
RBI doubles Minimum Capital Requirement to Rs 200 cr for SFBs
  • For Primary (Urban) Co-operative Banks (UCBs) that wish to voluntarily transition into SFBs, the initial net worth requirement will be Rs 100 crore.
  • This must be increased to Rs 200 crore within five years from the commencement of business.
  • Payments Banks can apply for conversion into SFBs after five years of operations if they are otherwise eligible as per the guidelines.
  • In fact, Fino Payments Bank has already applied for an SFB license as per regulatory guidelines on Payments Bank conversion to SFB.
  • SFBs are expected to offer basic banking services, accepting deposits and lending to unserved and underserved sections, including small business units, small and marginal farmers, micro and small industries, and entities in the unorganised sector.
  • The difference between SFBs and Payments Bank is that the latter is not allowed to do lending.

Question:

Q.1 What is the new minimum capital requirement for Small Finance Banks (SFBs) as per the revised guidelines issued by the Reserve Bank of India (RBI)?
a. Rs 100 crore
b. Rs 200 crore
c. Rs 300 crore
d. Rs 400 crore

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