Local Area Banks: Eligibility, goals, capital
Q. Which of the following statements is/are correct about Local Area Banks (LABs)?
1. LABs were required to have a minimum capital of Rs. 5 crore.
2. In 2014, RBI has permitted LABs to be converted into small finance banks subject to them meeting the prescribed eligibility criteria.- Published on 07 Oct 15a. Only 1
b. Only 2
c. Both
d. None
ANSWER: Both
- LABs were set up to enable the mobilization of rural savings by local institutions and at the same time, to make them available for investments in the local areas.
- The area of operation of LAB is limited to a maximum of three geographically contiguous districts and are allowed to open branches only in its area of operation.
