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 :
A
1 and 2 only
Correct Answer
B
2 and 3 only
C
1 and 3 only
D
1, 2 and 3
Explanation
Small Finance Banks (SFBs) were established to promote financial inclusion by providing credit to underserved segments, specifically small business units, small and marginal farmers, and micro-industries. Statement 3 is incorrect because the primary regulatory mandate of SFBs is to provide basic banking services to specific unserved groups, whereas encouraging "young entrepreneurs" is a broader developmental goal typically associated with schemes like MUDRA or Startup India. The core concept tested is the specific objective and target demographic of differentiated banking institutions in India.
Banking Sector ReformsDifferentiated Banks (Small Finance Banks)Small Finance BanksSFBsNachiket Mor CommitteeFinancial InclusionPriority Sector LendingPSL