UPSC Prelims 2017 – Question 40

Here is Question No. 40 a part of our series on UPSC Prelims 2017

Q40. 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
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3

The correct answer is 1 and 2 only. 

• According to the RBI guidelines 
• The goals of small finance banks will be to increase financial inclusion by providing savings vehicles and providing credit to small business units, small and marginal farmers, micro and small industries, and other unorganised sector entities via high technology-low-cost operations. Hence, statements 1 and 2 are correct. 
• There is no explicit provision stating that SFBs were established to encourage the establishment of businesses in rural areas. Hence, statement 3 is incorrect. 

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