Payment & Small Banks — Set 2
Banking · पेमेंट और स्मॉल बैंक · Questions 11–20 of 70
Which of the following is a mandatory prefix or suffix for Small Finance Banks in their name?
Correct Answer: C. Small Finance Bank
Every such bank must use the term 'Small Finance Bank' in its name to distinguish it from universal banks. This requirement helps customers clearly identify the nature of the institution. Similarly, Payment Banks must include 'Payments Bank' in their title.
Small Finance Banks were initially given a period of how many years to reach a Capital to Risk-Weighted Assets Ratio (CRAR) of 15%?
Correct Answer: D. Immediately from commencement
SFBs are required to maintain a minimum CRAR of 15% on a continuous basis from the start of operations. This is higher than the 9% requirement for most other commercial banks in India. A higher capital buffer is maintained due to their focused and potentially riskier borrower base.
Which entity provides the deposit insurance for accounts held in Payment Banks and Small Finance Banks?
Correct Answer: A. DICGC
Deposits in these banks are insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC). The insurance cover currently stands at Rs. 5 lakh per depositor per bank. This provides the same level of security to depositors as found in large public or private sector banks.
Payment Banks are allowed to act as a 'Business Correspondent' (BC) for?
Correct Answer: D. Any other bank
Payment Banks can act as BCs for other banks, allowing them to offer credit products without taking the risk on their own books. This allows them to cross-sell loans and credit cards to their existing customer base. It serves as an additional revenue stream for these specialized entities.
What is the maximum foreign investment limit allowed in Small Finance Banks?
Correct Answer: B. 74%
Foreign investment in SFBs is allowed up to 74% of the paid-up capital, similar to private sector banks. This includes both Foreign Direct Investment (FDI) and Portfolio Investment. The majority ownership, however, must remain compliant with the promoter holding rules.
Capital Small Finance Bank, the first SFB of India, started its operations in which state?
Correct Answer: C. Punjab
Capital Small Finance Bank, headquartered in Jalandhar, Punjab, became India's first SFB in April 2016. It transitioned from its previous status as a Local Area Bank. It was among the ten entities that received the initial in-principle approval from the RBI.
Small Finance Banks are permitted to deal in Foreign Exchange for?
Correct Answer: C. Meeting their customers' requirements
SFBs can become 'Authorized Dealer-Category II' to handle foreign exchange for their customers. This allows them to facilitate services like outward remittances and travel-related currency needs. It enhances the range of services they can offer to their local clientele.
What is the minimum percentage of loans in a Small Finance Bank's portfolio that must be up to Rs. 25 lakh?
Correct Answer: D. 50%
At least 50% of the loan portfolio of an SFB should constitute loans and advances of up to Rs. 25 lakh. This regulation ensures that the bank remains focused on small borrowers and micro-enterprises. It prevents the bank from becoming too focused on large corporate clients.
The 'India Post Payments Bank' (IPPB) is a 100% equity-owned entity of which department?
Correct Answer: B. Department of Posts
IPPB is a public sector bank under the Department of Posts, which is part of the Ministry of Communications. It utilizes the vast network of post offices and postmen to deliver banking services at the doorstep. The bank aims to bridge the last-mile connectivity gap in rural India.
Which type of bank is allowed to offer Internet Banking and Mobile Banking services?
Correct Answer: C. Both Payment and Small Finance Banks
Both Payment Banks and Small Finance Banks are encouraged to use technology to lower costs and increase reach. They are permitted to offer full digital banking suites, including internet and mobile apps. Technology-driven models are essential for the financial viability of these specialized banks.