Payment & Small Banks — Set 6
Banking · पेमेंट और स्मॉल बैंक · Questions 51–60 of 70
In which year did the Reserve Bank of India first grant in-principle approval to 11 entities for Payment Banks?
Correct Answer: A. 2015
The RBI granted in-principle approval to 11 applicants to set up Payment Banks in August 2015. Out of these, only some entities eventually launched their operations. This was a major milestone in India's financial sector liberalization.
Which of the following is a key objective of Small Finance Banks?
Correct Answer: B. Provision of savings vehicles and supply of credit to small business units
The primary objective of SFBs is to provide institutional credit to small farmers and micro-industries. They also aim to provide a safe saving mechanism for the unorganized sector. This helps in drawing more people into the formal financial system.
Payment Banks can be thought of as a ________ version of universal banks.?
Correct Answer: D. Deposit-only
Payment Banks are effectively 'deposit-only' institutions since they are not allowed to lend. They offer basic transaction and savings services without the risks of credit cycles. This makes them safer for small depositors but limits their revenue models.
What is the maximum limit of deposit in a Small Finance Bank?
Correct Answer: C. There is no upper limit on deposits
Unlike Payment Banks, Small Finance Banks do not have a constitutional or regulatory upper limit on individual deposits. They can compete with universal banks to attract large deposits from any customer. However, their lending focus must remain on the small-ticket size segment.
Which Small Finance Bank has its headquarters in Bengaluru and was the first to start as an SFB in Southern India?
Correct Answer: A. Ujjivan Small Finance Bank
Ujjivan Small Finance Bank is headquartered in Bengaluru and started operations in February 2017. It was formerly a large microfinance company. It has a significant presence in the urban micro-segment.
Which of the following describes the 'Differentiated Banks' in the Indian context?
Correct Answer: B. Banks whose licenses are restricted to certain activities
Differentiated banks like Payment and Small Finance Banks are specialized entities with restricted activity scopes. This is different from Universal Banks, which can perform all types of banking activities. They are tailored to meet specific market needs or underserved segments.
Small Finance Banks are required to maintain a Capital Adequacy Ratio (CAR) of what percentage?
Correct Answer: C. 15%
The minimum Capital Adequacy Ratio for Small Finance Banks is 15%. This high requirement is to ensure the bank remains solvent even if a large portion of its small-ticket loans face defaults. It acts as a safety cushion for depositors' funds.
Under which legislation does the RBI primarily derive its authority to cancel the licence of a Payment Bank and direct its winding up?
Correct Answer: B. Banking Regulation Act, 1949
The RBI primarily derives its authority to cancel licences and direct the winding up of Payment Banks from the Banking Regulation Act, 1949. This Act gives the RBI comprehensive supervisory and regulatory powers over all banking companies including Payment Banks. Section 35A allows the RBI to issue directions, while Sections 45 to 45-MB deal with reconstruction and amalgamation. The Companies Act, 2013 governs general corporate aspects, while the Payment and Settlement Systems Act, 2007 covers the payment systems framework specifically.
AU Small Finance Bank, one of the largest SFBs, was originally which type of company?
Correct Answer: B. A Vehicle Finance NBFC
AU Small Finance Bank was originally AU Financiers, a prominent NBFC focused on vehicle and SME financing. It converted into a bank in 2017. This transition allowed it to lower its cost of funds by accepting deposits.
Payment Banks are allowed to offer which type of debit card to their customers?
Correct Answer: D. Both physical and virtual cards
Payment Banks typically offer virtual cards through their apps for online shopping and physical cards for ATM use. This flexibility is key to their digital-first strategy. They partner with networks like RuPay, Visa, or Mastercard for these cards.