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RBI sets eligibility rules for SFBs seeking universal banking licence

Published on April 26, 2024
Current Context: The Reserve Bank of India (RBI) has outlined the eligibility criteria for small finance banks (SFBs) aspiring to obtain a universal banking license.
RBI sets eligibility rules for SFBs seeking universal banking licence
  • These criteria are essential for SFBs to transition into full-fledged banks and offer comprehensive services to both retail and corporate clients.
  • Here are the key requirements:
    • Operational Track Record: SFBs must have a five-year track record of satisfactory performance.
    • Net Worth: They need to maintain a net worth of at least 10 billion rupees.
    • Capital Adequacy: SFBs should meet the prescribed capital adequacy requirements.
    • Profitability: Recent profitability is crucial, and they should demonstrate consistent profitability over the past two years.
    • Limited Non-Performing Assets: SFBs must have limited non-performing assets.
    • Market Listing: Their shares should be listed on a recognized stock exchange.
    • Existing Promoters: Existing promoters can continue without new additions.
    • Shareholding Plans: Approved shareholding plans will remain unchanged.
    • Diversified Loan Portfolios: SFBs with diversified loan portfolios are favored.
    • Detailed Rationale: Eligible SFBs must provide a detailed rationale for the transition.
    • Assessment Guidelines: Their applications will be assessed based on specified guidelines, including those for on-tap licensing and shareholding directions.
    • Norms Upon Transition: After transitioning, the banks will adhere to all relevant norms, including the structure of a non-operative financial holding company


Q.1 What is the minimum net worth requirement for SFBs seeking a universal banking license?
a. 5 billion rupees
b. 10 billion rupees
c. 15 billion rupees
d. 20 billion rupees
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