Economics • Banking & FinanceEasy
What is the primary objective of establishing 'Small Finance Banks' in India?
A. To provide corporate loans exclusively to large infrastructure conglomerates.
B. To further financial inclusion by providing basic banking services to unserved and underserved sections including small business units and marginal farmers.✓ Correct Answer
C. To handle international trade finance and foreign exchange reserves.
D. To exclusively issue sovereign currency notes and mint coins on behalf of the government.
💡 Solution & Explanation
Small Finance Banks are specialized niche banking institutions established under Reserve Bank of India guidelines with the core objective of advancing financial inclusion across unserved regions. They cater primarily to micro industries, small and marginal farmers, unorganized sector entities, and small business units by offering basic deposit and credit products. Unlike commercial banks focusing on large corporate financing, their mandate emphasizes grassroots economic participation.
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