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Topic: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.
5. What are niche banks? Differentiate between Payment Banks and Small Finance Banks. Do you think niche banking has been a success in India? Evaluate. (250 words)
Difficulty level: Easy
Reference: Insights on India
Why the question:
The question is part of the static syllabus of General studies paper – 3 and mentioned as part of Mission-2022 Secure timetable.
Key Demand of the question:
To write niche banking, its successes and limitation and to differentiate between SFB’s and payment banks.
Directive word:
Evaluate – When you are asked to evaluate, you have to pass a sound judgement about the truth of the given statement in the question or the topic based on evidence. You must appraise the worth of the statement in question. There is scope for forming an opinion here.
Structure of the answer:
Introduction:
Begin by defining niche banks.
Body:
First, mention a few features of niche banks.
Next, differentiate between Payment Banks and Small Finance Banks on the basis of the following – Scope of activities, Criteria, Nature of work, prohibited activities etc.
Next, evaluate the successes and limitations of Niche banks in Indian set up.
Conclusion:
Conclude by writing a way forward to overcome the limitations.
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