Question 1

Which microfinance institution is known as the Universal Bank?

Accepted Answer

Bandhan Financial Services Private Ltd is known as the Universal Bank after it received a banking license from the Reserve Bank of India, allowing it to operate as a full-service bank. This transition marked its evolution from a microfinance institution to a universal bank, enabling it to offer a wider range of financial products and services.

Question 2

Loans to poor people by banks have many limitations including lack of security and high operating cost. So to help them which type of finance system developed ?

Accepted Answer

Microfinance systems were developed to provide loans to poor people who lack traditional collateral and are often unable to access conventional banking services. These systems offer small loans, savings opportunities, insurance, and other financial services to help individuals start small businesses, cover emergency expenses, or invest in their futures.

Question 3

The following statements are related to Micro Finance System. Locate the wrong option ?

Accepted Answer

All the statements provided about the Micro Finance System are correct, indicating that there is no wrong option among the choices given. Microfinance indeed focuses on providing small-scale financial services like microcredit, encourages small savings, and supports the remittance of funds. It is fundamentally aimed at livelihood creation, helping individuals engage in activities that generate income, either in cash or in kind.

Question 4

Who introduced the concept of Micro Finance in Bangladesh in the form of the "Grameen Bank"? He is the Nobel laureate known by many as the "father of micro finance systems".

Accepted Answer

Muhammad Yunus is recognized for introducing the concept of microfinance in Bangladesh through the establishment of the Grameen Bank, earning him the title "father of microfinance systems" and a Nobel Peace Prize.

Question 5

What is Pradhan Mantri Suraksha Bima Yojana (PMSBY) Life insurance

Accepted Answer

Pradhan Mantri Suraksha Bima Yojana (PMSBY) is an accidental insurance scheme, not a life insurance policy. It provides accidental death and disability coverage.

Question 6

Which of the following is not the part of organized sector of Indian Money Market?

Accepted Answer

Chit Funds are considered a part of the unorganized sector of the Indian Money Market. Unlike Mutual Funds, Non-Banking Financial Companies (NBFCs), and the Reserve Bank of India (RBI), which are regulated by specific regulatory authorities and have formal and structured operations, Chit Funds are often informal and not regulated in the same manner, making them part of the unorganized sector.

Question 7

An arrangement in which a person enters into an agreement with a specified number of persons that every one of them shall subscribe a certain sum of money by way of periodical installments over a definite period and that each such subscriber shall, in his turn be entitled to the prize amount is called?

Accepted Answer

This arrangement is known by different names in different regions, including Chit, Chitty, and Kury. All these terms refer to a financial product where a group of people contributes money towards a common pool, which is then disbursed to members in turns, either through bidding or by lot.

Question 8

What is the minimum paid up capital requirement of small finance Banks?

Accepted Answer

The minimum paid up capital requirement for small finance banks is 100 crore.

Question 9

Which of the following operations are undertaken by small finance banks?

Accepted Answer

Small finance banks are designed to provide financial inclusion by accepting deposits, disbursing small loans, and they may also sell insurance products as part of their services.

Question 10

How much credit small finance banks has to give to priority sectors?

Accepted Answer

Small finance banks are required to extend 75% of their Adjusted Net Bank Credit (ANBC) to the priority sectors, which is a mandate to ensure that the underserved sections of the economy receive adequate credit.

Question 11

Who is eligible to be a promoter of small finance banks?

Accepted Answer

All of the above categories, including Individuals, Corporates, and Trusts, are eligible to be promoters of small finance banks, as per the guidelines issued by the Reserve Bank of India (RBI).

Question 12

What can be the minimum initial contribution to the paid -up equity capital of small finance banks?

Accepted Answer

The minimum initial contribution to the paid-up equity capital of small finance banks by promoters should be at least 40%.

Question 13

To be a promoter in Small Finance Bank, resident individuals/professionals should have ____ years of experience in banking and finance

Accepted Answer

Resident individuals/professionals need to have 10 years of experience in banking and finance to be a promoter in a Small Finance Bank.

Question 14

What is the FDI Limit in Small Finance Bank?

Accepted Answer

The FDI limit in Small Finance Banks is 74%, as per the guidelines issued by the Reserve Bank of India (RBI). This allows for substantial foreign investment, aiming to bring in more capital and expertise into the sector.

Question 15

The promoter's minimum initial contribution to the paid-up equity capital of small finance bank shall at least be ____ per cent.

Accepted Answer

The promoter's minimum initial contribution to the paid-up equity capital of a small finance bank should be at least 40%.

Question 16

The promoter's minimum initial contribution to the paid-up equity capital of such small finance bank shall at least be 40 per cent and gradually brought down to ____ per cent within 12 years.

Accepted Answer

The promoter's minimum initial contribution to the paid-up equity capital of a small finance bank must be at least 40% initially, which should be gradually brought down to 26% within 12 years.

Question 17

For Small Finance Bank, ____ of its loan portfolio should constitute loans and advances of upto Rs. 25 lakh.

Accepted Answer

Small Finance Banks are required to have at least 50% of their loan portfolio constituted by loans and advances of up to Rs. 25 lakh, to ensure focus on small borrowers.

Question 18

Small Finance Banks are registered under which Act?

Accepted Answer

Small Finance Banks are registered as companies under the Companies Act, 2013, and they are also governed by the provisions of the Banking Regulation Act, 1949 for their banking operations.

Question 19

Small Finance Bank are licensed under which Act?

Accepted Answer

Small Finance Banks are licensed under the Banking Regulation Act, 1949, which allows them to operate as a bank under the guidelines prescribed by the RBI.

Question 20

Which of the following statement is wrong about Small Finance Banks?

Accepted Answer

Small Finance Banks (SFBs) cannot act as Business Correspondents (BCs) for another bank, as their primary role is to provide financial services to sections of the economy not served by traditional banks, such as small business units, small and marginal farmers, micro and small industries, and unorganized sector entities.

Quiz 2: Microfinance and Small Finance Banks in India