Current Affairs · Banking Regulations
A large multi-state Cooperative Bank in India is planning to transition into a Small Finance Bank (SFB) to expand its pan-India presence. The bank's current Net Worth is 150 crore rupees. According to the current Reserve Bank of India (RBI) guidelines, which of the following evaluations of the bank's transition plan is most accurate?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The transition requires the bank to maintain a CRAR of 15 percent on a continuous basis, and the promoters are required to bring down their initial shareholding to 26 percent within a period of 5 years.
- 2Since the bank is a Cooperative Bank, it is exempt from the 75 percent Priority Sector Lending (PSL) target for the first ten years of its operation as an SFB.
- 3The bank must first increase its minimum net worth to 200 crore rupees to be eligible for the SFB license, and upon transition, it must ensure that at least 50 percent of its loan portfolio consists of loans and advances up to 25 lakh rupees.✓
- 4The bank can transition immediately with its current net worth of 150 crore rupees as the minimum requirement for SFBs is 100 crore.
Correct answer
The bank must first increase its minimum net worth to 200 crore rupees to be eligible for the SFB license, and upon transition, it must ensure that at least 50 percent of its loan portfolio consists of loans and advances up to 25 lakh rupees.
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