What are we going to cover?

Small Finance Banks allowed to offer more forex products

In a move to provide flexibility to SFBs the RBI

has allowed SFBs which have completed two
years of operations as Category-II Authorised
Dealer to do Category-I Authorised Dealer
business, subject to compliance of certain norms.

Small finance banks will now be able to offer a

wide range of forex products to their customers.
Authorised dealers are the institutions that have the license from the RBI to sell
and buy foreign currencies. As per the FEMA, 1999, the Reserve Bank, on an
application, may authorise any person to be known as an authorised person, to
deal in foreign exchange as an Authorised Dealer.

Category III ADs carry out specific foreign exchange transactions incidental to their
business / activities.
Eligibility norms for Small Finance Banks for Authorised Dealer
Category-I
 Additional Information - Small Finance Bank

The small finance bank, in furtherance of the objectives for

which it is set up, shall primarily undertake basic banking
activities of acceptance of deposits and lending to unserved
and underserved sections including small business units,
small and marginal farmers, micro and small industries and
unorganised sector entities.
The minimum paid-up voting equity capital for small finance
banks shall be Rs.200 crore
In view of the inherent risk of a small finance bank, it
shall be required to maintain a minimum capital
adequacy ratio of 15% of its risk weighted assets
(RWA) on a continuous basis, subject to any higher
percentage as may be prescribed by RBI from time to
time.

Total Priority Sector – 75% of ANBC as computed in para 6

below or CEOBE whichever is higher.
 MCQs for Practice

Q. Recently in August 2022, With the objective of giving more flexibility to SFBs to meet their customers’
foreign exchange business requirement, it has been decided that all the scheduled SFBs, after completion of
at least _______ of operations as Authorised Dealer Category-II, will be eligible for Authorised Dealer Category-
I license subject to compliance with the eligibility norms..

A. 3 years
B. 5 years
C. 2 years
D. 4 years
E. 6 years
 MCQs for Practice

Q. Recently in August 2022 RBI has released the Eligibility norms for Small Finance Banks to become
Authorised Dealer Category-I. As per the eligibility norms, the net NPAs of the bank should not exceed
________, during previous four quarters.
A. 10%
B. 8%
C. 9%
D. 7%
E. 6%
Q. Recently (September 2021) NARCL was launched by the
Union Cabinet approving the government guarantee on
security receipts to buy bad loans of lenders. It has been
incorporated under the Companies Act and has applied for
license from RBI. What does R stand for in NARCL?

1. Resolution
2. Reconstruction
3. Restructuring
4. Revenue
5. None of the Above