What is the purpose of setting up of Small Finance Banks (SFBs) in India? 1. To supply credit to small business units 2. To supply credit to small and marginal farmers 3. To encourage young entrepreneurs to set up business particularly in rural areas. Select the correct answer using the code given below:

QUESTION

Medium

Economy

Prelims 2017

What is the purpose of setting up of Small Finance Banks (SFBs) in India?

To supply credit to small business units
To supply credit to small and marginal farmers
To encourage young entrepreneurs to set up business particularly in rural areas.

Select the correct answer using the code given below:

Select an option to attempt

Explanation

Statement 1 is Correct: Small Finance Banks (SFBs) are niche banks specifically designed to cater to the underserved and unbanked sections of the population, including small businesses, marginal farmers, and micro-industries.

Statement 2 is Correct: SFBs focus on financial inclusion by providing credit facilities to small businesses and marginal farmers.

Statement 3 is Incorrect: In conclusion, While SFBs might indirectly contribute to rural development by providing credit to small businesses in rural areas, their primary objective is not explicitly to encourage young entrepreneurs to set up businesses there (option 3).

Hence, option A is the correct answer.

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