What is the purpose of setting up of Small Finance Banks (SFBs) in India?
- To supply credit to small business units
- To supply credit to small and marginal farmers
- To encourage young entrepreneurs to set up business particularly in rural areas.
Select the correct answer using the code given below:
Detailed Explanation:
Answer: Option 1 — 1 and 2 only
Small Finance Banks (SFBs) were established by the Reserve Bank of India to promote financial inclusion by providing basic banking services to the unserved and underserved sections of the population. Their primary objective is to supply credit to small business units, small and marginal farmers, micro and small industries, and unorganized sector entities.
✅ Statement 1 – Correct: SFBs are specifically designed to provide credit facilities to small business units as part of their core mandate for financial inclusion.
✅ Statement 2 – Correct: Providing credit to small and marginal farmers is one of the primary objectives of SFBs to support agricultural and rural development.
❌ Statement 3 – Incorrect: While SFBs may indirectly benefit young entrepreneurs, their primary purpose is not specifically to encourage young entrepreneurs to set up businesses in rural areas; this is more aligned with schemes like MUDRA or Stand-Up India.
Question 10 of 15 Banking Structure in India
Practice PYQ questions from this topic across all years
Consider the following events: The first democratically elected communist party go...
What is/are the purpose/purposes of the ‘Marginal Cost of Funds based Lending R...