Payment & Small Banks — Set 1
Banking · पेमेंट और स्मॉल बैंक · Questions 1–10 of 70
Which committee's recommendation led to the setting up of Payment Banks and Small Finance Banks in India?
Correct Answer: C. Nachiket Mor Committee
The Nachiket Mor Committee recommended the creation of specialized banks to promote financial inclusion in 2013. These banks were designed to provide basic banking services to small businesses and low-income households. This initiated the era of differentiated banking in the Indian financial sector.
What is the maximum limit for deposits per individual customer in a Payment Bank as of the current guidelines?
Correct Answer: B. Rs. 2,00,000
The Reserve Bank of India increased the deposit limit for Payment Banks to Rs. 2 lakh in 2021. Previously, the limit was restricted to Rs. 1 lakh per individual. This change was aimed at incentivizing the growth of these banks and enhancing customer convenience.
Which of the following activities is a Payment Bank NOT allowed to perform?
Correct Answer: C. Issuing Credit cards
Payment Banks are prohibited from undertaking lending activities and therefore cannot issue credit cards. They can only issue debit cards and accept demand deposits like savings and current accounts. This restriction is meant to limit their credit risk exposure.
What is the minimum paid-up equity capital required to set up a Small Finance Bank or a Payment Bank?
Correct Answer: B. Rs. 100 crore
The initial minimum paid-up equity capital for both Payment and Small Finance Banks was fixed at Rs. 100 crore. However, for SFBs, this requirement has been raised to Rs. 200 crore for new licenses under the 'on-tap' window. Capital requirements ensure that these banks have a strong financial foundation.
Small Finance Banks are required to extend what percentage of their Adjusted Net Bank Credit (ANBC) to the Priority Sector?
Correct Answer: D. 75%
Small Finance Banks have a higher Priority Sector Lending (PSL) target of 75% compared to 40% for universal commercial banks. This mandate ensures that the majority of their funds flow to agriculture and small industries. It aligns with their primary objective of providing credit to underserved segments.
Payment Banks must invest at least what percentage of their demand deposit balances in Statutory Liquidity Ratio (SLR) eligible government securities?
Correct Answer: B. 75%
Payment Banks are required to invest 75% of their demand deposits in high-quality government securities with a maturity up to one year. The remaining 25% must be kept as deposits with other scheduled commercial banks. This stringent liquidity requirement ensures the safety of public money.
What percentage of the branches of a Small Finance Bank must be opened in unbanked rural areas?
Correct Answer: D. 25%
At least 25% of the total number of branches of a Small Finance Bank must be in unbanked rural centers. This regulation is designed to improve physical access to banking services in remote regions. It is a mandatory condition for maintaining their specialized banking license.
Who was the first Payment Bank to launch its operations in India?
Correct Answer: A. Airtel Payments Bank
Airtel Payments Bank became the first entity to start operations as a Payment Bank in January 2017. It leveraged its vast telecom network to reach millions of users across the country. This launch marked the practical implementation of the differentiated bank model.
Which type of bank is permitted to accept Time Deposits (Fixed Deposits)?
Correct Answer: C. Small Finance Bank
Small Finance Banks can accept all types of deposits, including Fixed Deposits (FDs) and Recurring Deposits (RDs). Payment Banks are strictly limited to accepting only demand deposits (Savings and Current accounts). SFBs function much like full-service banks for their target segments.
In a Small Finance Bank, what is the maximum loan size and investment limit to a single person?
Correct Answer: C. 10% of its capital funds
Small Finance Banks are restricted from lending more than 10% of their capital funds to a single individual borrower. For groups, the limit is set at 15% of the capital funds. These prudential norms are established to prevent over-concentration of risk.