What is the purpose of setting up of Small Finance Banks SFBs in India 1 To supply credit to small b...........

Economic Affairs Types of Banks and Banking

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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:

1 and 2 only

2 and 3 only

1 and 3 only

1, 2 and 3

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Explanation:

Justification: As per 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.” It will thus support unserved and underserved sections.
However, apart from the provision of credit, there is no explicit provision that SFBs have been setup to encourage setting of businesses in rural areas. Statement 3 will be considered wrong.