• The Reserve Bank of India (RBI) has issued guidelines regarding the conversion of a Small Finance Bank (SFB) into a Universal Bank. The conversion allows an SFB to expand its operations and provide a broader range of financial products and services to a larger customer base.
• According to the RBI guidelines, the eligibility criteria for a Small Finance Bank to convert into a Universal Bank include:
1) The bank must have a minimum net worth of Rs. 1,000 crore.
2) The bank must hold scheduled status, meaning it is recognized by the RBI as a part of the formal banking system.
3) The bank must have a satisfactory track record of performance for a minimum of 5 years.
• These criteria ensure that the Small Finance Bank has the necessary financial stability and operational experience to handle the expanded responsibilities that come with being a Universal Bank.
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