InvestorQ : What are the guidelines small finance banks must follow for operating in India?
Anjali Desai made post

What are the guidelines small finance banks must follow for operating in India?

Answer
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Nishita Gala answered.
1 year ago


Small finance bank is a type of bank and falls under the ambit of the Reserve Bank of India (RBI), thus all rules, regulations and criteria for it are set by the RBI.

For small finance bank, the RBI has set the following prudential norms:


- The small finance bank will be subject to all prudential norms and regulations of RBI as applicable to existing commercial banks including requirement of maintenance of Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR).

- No forbearance would be provided for complying with the statutory provisions.

- The small finance banks will be required to extend 75 per cent of its Adjusted Net Bank Credit (ANBC) to the sectors eligible for classification as priority sector lending (PSL) by the Reserve Bank.

- At least 50 per cent of its loan portfolio should constitute loans and advances of up to Rs. 25 lakh.