Reserve Bank of India (RBI) recently granted an in-principle license to ________ entities for setting up small finance banks.

a. 11

b. 10

c. 12

d. 2

ANSWER: 10

Explanation:

The Reserve Bank of India (RBI) recently granted an in-principle nod to 10 entities for setting up small finance banks.

The 10 entities that received the nod for small banks include -

Au Financiers (Jaipur)

Capital Local Area Bank (Jalandhar)

Disha Microfin (Ahmedabad)

Equitas Holdings (Chennai)

ESAF Microfinance and Investments (Chennai)

Janalakshmi Financial Services (Bengaluru)

RGVN (Northeast) Microfinance (Guwahati)

Suryoday Micro Finance (Navi Mumbai)

Ujjivan Financial Services (Bengaluru)

Utkarsh Micro Finance (Varanasi)

In a way, there are like commercial banks because both provide the saving and lending facility, however, small banks must follow stricter regulations as proposed by RBI.

75% of its Adjusted Net Bank Credit (ANBC) should be advanced to the priority sector.

Maximum loan size to a single person cannot exceed 10% of total capital funds; cannot exceed 15% in the case of a group.

Minimum paid-up equity capital requirement of Rs 100 crore.

A fundamental requirement is that it must have 25% of its branches set up in unbanked areas.