Why in the news
RBI cleared AU SFB, which holds about 40% of the SFB market, to convert into a universal bank.
Eligibility to convert
| Criterion | Requirement |
|---|
| Scheduled status | 5 years |
| Listing | On a recognised exchange |
| Net profit | In each of last 2 FYs |
| Asset quality | G-NPA up to 3%, N-NPA up to 1% |
| Promoters | No change during transition |
SFB versus universal bank
| Parameter | SFB | Universal bank |
|---|
| Focus | Underserved segments, small borrowers | All segments |
| Priority sector lending | 60% of ANBC | 40% of net loans |
| Minimum capital | ₹200 crore | ₹1,000 crore |
| Rural branches | 25% in unbanked areas | No such rule |
Background
- SFBs were announced in Union Budget 2014-15 for financial inclusion; governed by the Banking Regulation Act, 1949.
Exam angle
- PSL: SFB 60% of ANBC versus 40% for universal banks.