Question
Bank credit to NBFCs (MFI) and other recognized MFIs by
RBI, for on-lending will be allowed up to what limit of an individual bank’s total priority sector lending in case of Small Finance Banks?Solution
In case of SFBs (Small Finance Banks), credit to NBFC-MFIs (Micro Finance Institutions) and other MFIs (Societies, Trusts, etc.) which are members of RBI recognized ‘Self-Regulatory Organisation’ of the sector, will be allowed up to an overall limit of 10 percent of an individual bank’s total priority sector lending. These limits shall be computed by averaging across four quarters of the financial year, to determine adherence to the prescribed cap.
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