Current Affairs · Small Finance Bank Regulations
Under the revised regulatory framework for Small Finance Banks (SFBs) effective 2026, which of the following best explains the conceptual redefinition and operational treatment of 'Cash & Cash Equivalents'?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1It is conceptually broadened to include physical cash, standard bank deposits, and overnight mutual funds, provided the latter is subject to a minimum 10% structural haircut.✓
- 2The definition has been narrowed to exclude all forms of bank deposits that have a maturity of more than 7 days to prevent structural maturity mismatches in the balance sheet.
- 3It encompasses all liquid financial assets including equity-linked saving schemes and corporate bonds, provided they are rated AAA and can be liquidated within 48 hours.
- 4It is strictly restricted to physical currency and demand deposits held with the Reserve Bank of India to ensure absolute liquidity without any market-linked risk exposure.
Correct answer
It is conceptually broadened to include physical cash, standard bank deposits, and overnight mutual funds, provided the latter is subject to a minimum 10% structural haircut.
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