IIBF SFB flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

SFB Minimum Paid-up Capital

New small finance banks require a minimum paid-up capital of ₹200 crore. Promoters must initially hold at least 40% of paid-up capital, locked in for five years.

SFB Promoter Eligibility

Promoters must be resident individuals or entities with at least 10 years of banking or finance experience. Large industrial houses and joint ventures are not permitted as promoters.

SFB PSL Target

SFBs must maintain 75% of Adjusted Net Bank Credit in priority sector lending, against 40% for universal banks. At least 50% of ANBC must be loans up to ₹25 lakh.

Ticket Size Norm

At least 50% of an SFB's loan portfolio must consist of loans of ₹25 lakh or less per borrower, which is a condition of the licence.

PSL Shortfall Deposit

If an SFB falls short of its PSL target, the shortfall amount is deposited with NABARD's Rural Infrastructure Development Fund or other notified funds at RBI-prescribed rates.

Deposit Insurance Cover

DICGC insures deposits up to ₹5 lakh per depositor per bank, covering principal and interest. This cover applies to SFB deposits on the same basis as universal banks.

BSBDA

Basic Savings Bank Deposit Account offers no minimum balance, a free RuPay debit card, and basic transaction limits. SFBs must offer it to promote financial inclusion.

Integrated Ombudsman Scheme

RBI's 2021 scheme provides a single window for customer complaints against banks. Banks with 10 or more branches must appoint an internal ombudsman.

Microfinance Household Limit

Under RBI's 2022 microfinance direction, a rural household's annual income must not exceed ₹3 lakh, and an urban or semi-urban household's ₹5 lakh.

MFI Interest Rate Cap

The maximum rate is the lower of cost of funds plus a 10% margin, or 2.75 times the average base rate of the five largest commercial banks.

JLG Structure

A Joint Liability Group consists of 4-5 members who guarantee each other's loans. Group members are typically women from low-income households in the same locality.

CGTMSE Cover

The Credit Guarantee Fund Trust for Micro and Small Enterprises guarantees collateral-free loans up to ₹5 crore. SFBs are eligible lending institutions under the scheme.

SFB CRAR Requirement

Small finance banks must maintain a minimum Capital to Risk-Weighted Assets Ratio of 15%, compared with 11.5% for universal banks, reflecting their higher-risk profile.

Liquidity Coverage Ratio

LCR requires high-quality liquid assets to cover 30 days of net cash outflows. The minimum is 100%, and at least 50% of HQLA must be government securities.

NSFR Requirement

The Net Stable Funding Ratio requires available stable funding to be at least 100% of required stable funding, limiting reliance on short-term wholesale funding for long-term assets.

NPA Classification

A loan is non-performing when principal or interest is overdue for more than 90 days. SMA-0 covers 1-30 days, SMA-1 covers 31-60 days, and SMA-2 covers 61-90 days.

Standard Asset Provision

Banks must hold a general provision of 0.40% on standard commercial loans, plus specific provisions on substandard, doubtful, and loss assets as per IRAC norms.

CRR and SLR

CRR is 4% of Net Demand and Time Liabilities held with RBI. SLR is 18% of NDTL held in approved securities such as government bonds.

KYC Periodic Updation

KYC records must be updated at least every 2 years for high-risk, 8 years for medium-risk, and 10 years for low-risk customers, based on risk categorisation.

Cash Transaction Report

A CTR is filed with FIU-IND for cash transactions exceeding ₹10 lakh in a month, or its foreign currency equivalent, for each customer account.

Suspicious Transaction Report

An STR is filed with FIU-IND within 7 days of establishing suspicion of money laundering or terrorist financing, irrespective of the transaction amount.

PEP Due Diligence

Politically exposed persons require enhanced due diligence, senior management approval for the relationship, and verification of the source of funds and wealth.

SFB Conversion to Universal Bank

An SFB can apply to become a universal bank after five years of satisfactory performance, with a minimum net worth of ₹500 crore, CRAR of 15%, and SCR of 50%.

SFB Branch Norm

At least 25% of an SFB's branches must be in unbanked rural centres with a population below 10,000, as per RBI's branch authorisation policy.

V-CIP

Video-based Customer Identification Process allows remote onboarding of customers through a video call, with geo-tagging, face matching, and recording of the interaction for audit.

Premature Withdrawal Penalty

For term deposits above ₹5 lakh, premature withdrawal attracts a penalty as per board policy. The penalty cannot reduce the payout below the rate for the actual deposit period.

Microfinance Indebtedness Cap

A microfinance borrower's total indebtedness across all lenders is capped at ₹2 lakh. Lenders must verify this through credit bureau checks before disbursement.

Nayak Committee Norms

The Nayak Committee recommended turnover-based working capital limits for micro and small enterprises, with a simplified assessment method for limits up to ₹5 crore.

ALM Gap Analysis

ALM gap analysis compares rate-sensitive assets and liabilities across time buckets. A positive gap means assets reprice faster, exposing the bank to falling rates.

Leverage Ratio

The leverage ratio is Tier-I capital divided by total exposure. SFBs must maintain at least 4%, limiting excessive balance sheet growth relative to capital.

FIU-IND

The Financial Intelligence Unit-India is the national agency under the PMLA that receives and analyses CTRs and STRs filed by banks and other reporting entities.

Central Fraud Registry

RBI's Central Fraud Registry receives fraud reports from banks. Fraud cases above ₹1 lakh are reported, and cases above ₹1 crore go to the Board and its Special Committee.