Quiz on Small Finance Bank

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Topic: Quiz on Small Finance Bank

Number of Questions: 15

Pre-Readings: All about Small Finance Bank

1. To be a promoter in Small Finance Bank, resident individuals/professionals should have ____ years of experience in banking and finance
   A) 5
   B) 7
   C) 10
   D) 12
   
   View answer

     Option C
   Explanation: Resident individuals/professionals with 10 years of experience in banking and finance
2. What is the minimum paid-up equity capital for Small Finance Bank?
   A) Rs 50 crore
   B) Rs 500 crore
   C) Rs 1000 crore
   D) Rs 100 crore
   
   View answer

     Option D
   Explanation: The minimum paid-up equity capital for small finance banks shall be Rs. 100 crore.
3. What is the FDI Limit in Small Finance Bank?
   A) 26%
   B) 49%
   C) 74%
   D) 100%
   
   View answer

   Option C
   Explanation: 74% (As of Private Banks)
4. The promoter’s minimum initial contribution to the paid-up equity capital of small finance bank shall at least be ____ per cent.
   A) 10%
   B) 25%
   C) 26%
   D) 40%
   
   View answer

   Option D
   Explanation: The promoter’s minimum initial contribution to the paid-up equity capital of such small finance bank shall at least be 40 per cent
5. The promoter’s minimum initial contribution to the paid-up equity capital of such small finance bank shall at least be 40 per cent and gradually brought down to ____ per cent within 12 years.
   A) 10%
   B) 26%
   C) 25%
   D) 20%
   
   View answer

   Option B
   Explanation: The promoter’s minimum initial contribution to the paid-up equity capital of such small finance bank shall at least be 40 per cent and gradually brought down to 26 per cent within 12 years from the date of commencement of business of the bank.
6. Small Finance Bank must extend _____ per cent of its Adjusted Net Bank Credit (ANBC) to priority sector lending (PSL)
   A) 25
   B) 50
   C) 75
   D) 100
   
   View answer

   Option C
   Explanation: SFBs must extend 75 per cent of its Adjusted Net Bank Credit (ANBC) to priority sector lending (PSL)
7. For Small Finance Bank, ____ of its loan portfolio should constitute loans and advances of upto Rs. 25 lakh.
   A) 25 %
   B) 50%
   C) 75%
   D) 95%
   
   View answer

   Option B
   Explanation: At least 50 per cent of its loan portfolio should constitute loans and advances of upto Rs. 25 lakh.
8. For Small Finance Banks, the maximum loan size and investment limit exposure to a single and group obligor would be restricted to ___ per cent and ___ per cent of its capital funds respectively.
   A) 10 , 20
   B) 15 , 20
   C) 15 , 25
   D) 10 , 15
   
   View answer

   Option D
   Explanation: The maximum loan size and investment limit exposure to a single and group obligor would be restricted to 10 per cent and 15 per cent of its capital funds respectively.
9. Small Finance Banks are registered under which Act?
   A) Companies Act, 2013
   B) Banking Regulation Act, 1949
   C) Reserve Bank of India Act, 1934
   D) Credit Information Companies (Regulation) Act, 2005
   
   View answer

   Option A
   Explanation: Registered: Under the Companies Act, 2013 (as a public limited company)
10. Small Finance Bank are licensed under which Act?
    A) Banking Regulation Act, 1949
    B) Reserve Bank of India Act, 1934
    C) Payment and Settlement Systems Act, 2007
    D) Companies Act, 2013
    
    View answer

    Option A
    Explanation: Licensed: Under Section 22 of the Banking Regulation Act, 1949
11. The voting rights of shareholder in Small Finance Bank are capped at ____ per cent.
    A) 5
    B) 10
    C) 26
    D) 49
    
    View answer

    Option B
    Explanation: 10%
12. The voting rights of shareholder in Small Finance Bank are capped at 10 per cent. This limit can be raised to ____ per cent in a phased manner by the RBI.
    A) 25
    B) 50
    C) 26
    D) 49
    
    View answer

    Option C
    Explanation: Any shareholder’s voting rights in private sector banks are capped at 10 per cent. This limit can be raised to 26 per cent in a phased manner by the RBI.
13. Which of the following statement is wrong about Small Finance Banks?
    A) It can be Business Correspondent (BC) for another bank
    B) Large public sector entities and industrial and business houses cannot open Small Finance Bank
    C) SFBs are encouraged to lend to SHGs
    D) SFBs will be covered by the Banking Ombudsman (BO) Scheme
    
    View answer

    Option A
    Explanation: The small finance bank cannot be a Business Correspondent (BC) for another bank. However, it can have its own BC network.
14. What is the capital adequacy ratio for Small Finance Banks?
    A) 10% of RWA
    B) 15% of RWA
    C) 05% of RWA
    D) 20% of RWA
    
    View answer

    Option B
    Explanation: It shall be required to maintain a minimum capital adequacy ratio of 15 per cent of its risk weighted assets (RWA) on a continuous basis
15. Small Finance Banks and Payments Bank are a type of?
    A) Shadow Bank
    B) Universal Bank
    C) Differentiated Bank
    D) Delivery Bank
    
    View answer

    Option C
    Explanation: Small Finance banks and Payments bank are differentiated banks. Differentiated banks are those whose scope of activities are subset of those allowed for universal banks.

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