What is the minimum amount of capital required to establish small finance banks and payment banks?

The correct answer is 100 Crore.

Key Points

• Small Finance Banks and Payment Banks are specialized financial institutions in India.
• The minimum capital requirement to establish these banks is 100 Crore INR.
• These banks are regulated by the Reserve Bank of India (RBI).
• Small Finance Banks aim to provide financial inclusion by offering savings and credit facilities to small businesses, marginal farmers, and other unserved and underserved sections.
• Payment Banks focus on increasing financial inclusion by providing small savings accounts, payment/remittance services to migrant labor workforce, low-income households, small businesses, and other unorganized sector entities.
• The objective of these banks is to ensure that the benefits of banking reach the masses, especially in rural and semi-urban areas.
• Both types of banks are not allowed to issue credit cards, and Payment Banks cannot offer loans or credit facilities.

 Additional Information

• Reserve Bank of India (RBI)
  • The RBI is the central banking institution of India, which controls the monetary policy of the Indian rupee.
  • It was established on April 1, 1935, under the Reserve Bank of India Act, 1934.
  • The RBI's primary functions include regulating the issue and supply of the Indian rupee, managing the country's main payment systems, and working to promote economic development.
  • It also plays a crucial role in the development strategy of the Government of India.
• Small Finance Banks
  • These banks cater to the needs of small businesses, small and marginal farmers, micro and small industries, and other unorganized sector entities.
  • They can offer basic banking services such as accepting deposits and lending to the underserved sections of society.
  • Examples include Ujjivan Small Finance Bank and Jana Small Finance Bank.
• Payment Banks
  • Payment Banks can accept deposits up to ₹2 lakh per customer and provide remittance services.
  • They can issue ATM/debit cards but not credit cards.
  • Examples include Airtel Payments Bank and Paytm Payments Bank.