In April 2024, the Reserve Bank of India (RBI) issued guidelines for the voluntary conversion of which type of bank into universal banks, subject to certain conditions?

Explanation

The Reserve Bank of India (RBI) issued guidelines in April 2024 for the voluntary conversion of Small Finance Banks (SFBs) into universal banks. Detailed Overview of Guidelines: • This transition is based on the 2019 "on-tap" licensing guidelines, requiring the SFBs to meet the minimum paid-up capital or net worth requirements for universal banks, maintain a satisfactory performance for a minimum of five years, and pass the RBI’s due diligence exercise. • To be eligible for conversion into a universal bank, the RBI stipulates that only listed SFBs will qualify. • Those intending to convert must have a minimum net worth of Rs 1,000 crore. • Also, the SFBs must have a scheduled status and a satisfactory track record of at least five years with a gross non- performing asset (NPA) of 3 per cent or less and a net NPA of 1 per cent or less in the past two financial years.