Q. Which of the following statements correctly distinguishes a Small Finance Bank (SFB) from a Payment Bank (PB) in India?

[A] A Payment Bank can grant loans and issue credit cards, whereas an SFB is restricted only to deposits and remittances.

[B] An SFB is not required to maintain the Cash Reserve Ratio (CRR), but a PB is mandated to maintain both CRR and Statutory Liquidity Ratio (SLR).

[C] An SFB can accept deposits up to a maximum limit of ₹2,00,000 per customer, while a PB has no such cap.

[D] An SFB can accept all types of deposits (savings, current, term, recurring), while a PB can only accept demand deposits (savings and current).

Answer: D
Notes:

Explanation:

  1. a) Incorrect. A Payment Bank (PB) cannot grant loans or issue credit cards. An SFB can grant loans and issue credit cards.
  2. b) Incorrect. Both SFBs and PBs are Scheduled Commercial Banks and must maintain the CRR with the RBI. PBs are required to invest a minimum of 75% of their demand deposit balances in SLR-eligible G-Secs/T-Bills.
  3. c) Incorrect. The maximum deposit limit of ₹2,00,000 per customer applies to a Payment Bank (PB), not an SFB. An SFB has no such cap and is subject to the same deposit rules as other commercial banks.
  4. d) Correct. An SFB can accept all types of deposits, including both demand deposits and time deposits (fixed/recurring). A Payment Bank can only accept demand deposits (Savings/Current accounts) and cannot accept Non-Resident Indian (NRI) deposits.
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