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.

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:

The primary objectives of setting up Small Finance Banks (SFBs) as per RBI guidelines are:

• To further financial inclusion.
• To provide savings vehicles.
• To supply credit to small business units, small and marginal farmers, micro and small industries, and other unorganized sector entities through high technology-low cost operations.
• To support unserved and underserved sections of the population.

While SFBs aim to provide credit, there is no explicit provision stating that they are specifically set up to encourage the establishment of businesses in rural areas.

Statement 1 is correct. Statement 2 is correct. Statement 3 is incorrect.

Hence, only statements 1 and 2 are correct.

Sources:

• RBI Press Release
• Livemint Article