Discussion
Which of the following is not true about Small Finance Bank?
Answer: D
Correct answer: They can set up subsidiaries to undertake non-banking financial service activities.
This is the statement that is not true. The RBI's guidelines expressly bar a Small Finance Bank from setting up subsidiaries for non-banking financial service activities. The model is deliberately narrow - the bank is to concentrate on basic deposit-taking and lending to underserved segments rather than build a financial conglomerate.
The other three are correct: minimum paid-up equity capital of ₹100 crore, at least 50 per cent of the loan portfolio in advances of up to ₹25 lakh, and single-borrower exposure capped at 10 per cent of capital funds and group exposure at 15 per cent.
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