About Commodity dependence
- A country is dependent on the export of commodities (or “commodity-dependent”) when its merchandise exports are heavily concentrated on primary commodities (like crude oil, coal, iron ore, etc.).
- The source of commodity dependence can be linked to a country’s persistent or structural conditions, such as its resource endowment and factor composition, institutional framework, geographic situation, history among other factors.
ELIGIBILITY FOR BANKING BY SFBS UNIVERSAL
RBI set eligibility criteria for Small Finance Banks (SFB) to transit into universal banking under on-tap licensing.
- Universal banks (UBs) are banks that offer a wide range of financial services, beyond commercial banking and investment banking, such as insurance.
- Until now, SFBs were allowed to primarily undertake basic banking activities of acceptance of deposits and lending to unserved and underserved sections
On-tap licensing: It was introduced in 2016 to allow banks to apply for banking licenses with the RBI throughout the year.
- Prior to this, banking licenses were granted upon invitation of applications by RBI to prospective players.
Eligibility for SFBs to transitioning into UBs
- Net Worth: SFBs must have a minimum net worth of Rs 1,000 crore.
- Status: SFBs must be scheduled banks with a satisfactory track record of performance for a minimum of 5 years.
- Financial Health:
- Profitability: Should have net profits in the last two Financial Years.
- Asset Quality: Gross non-performing assets (G NPA) and net NPA (N-NPA) must be less than or equal to 3% and 1%, respectively, over the last two FYs.
- Stock Listing: Shares must be listed on a recognized stock exchange.
- Promoter Requirements: No addition of new promoters or changes to existing promoters are permitted during the transition.
- No changes are allowed to the promoter shareholding dilution approved by the RBI. plan previously
- Preference: SFBs with a diversified loan portfolio will be preferred.
About Small Finance Banks (SFBs) from the image:
- Genesis: Announced in the Union budget of 2014-15.
- Registrations: Registered as a public limited company under the Companies Act, 2013.
- Licensing: Licensed and governed under the Banking Regulation Act, 1949. They have no restrictions on where to operate.
- Capital Requirement: 200 crore (except for some SFBs).
- Mandates for financial inclusion: Required to extend 75% of their ANBC (Adjusted Net Bank
