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:
[UPSC Civil Services Exam – 2017 Prelims]
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
As per the RBI guidelines:
- The objectives of setting up of small finance banks will be to further financial inclusion by (a) provision of savings vehicles, and (ii) supply of credit to small business units; small and marginal farmers; micro and small industries; and other unorganised sector entities, through high technology-low cost operations. (Hence statement 1 and 2 is correct)
- There is no explicit provision that SFBs have been setup to encourage setting of businesses in rural areas. (Hence statement 3 is incorrect)