In order to further strengthen the banking system in the Indian economy and to provide banking facilities to all, apart from the major traditional banks of India, the Small Finance Bank was included in the banking system in the Government of India. Today Small Finance Banks can do almost all types of financial transactions like major banks in India and Indian citizens can avail various facilities of these banks as per their convenience.
Introduction to Small Finance Bank
Small Finance Bank is a specific segment of the banking system created by the Reserve Bank of India under the guidance of the Government of India, which plays a huge role in India’s banking system and is considered a strong pillar of the Indian economy.
The main objective of which is to advance financial inclusion and make banking accessible to all by introducing basic banking activities for small business units, small and marginal farmers, micro and small scale industries and other unorganized sector.
Small finance banks may provide basic banking services such as acceptance of deposits and loans in a limited manner. Indian citizens can do banking transactions and avail loans by opening their accounts here. These banks are also trying to promote green banking in India.
Like other commercial banks, these banks can perform all basic banking activities including lending and taking deposits. But, they can carry out financial transactions and banking activities to a limited extent as per the guidelines issued by RBI like conventional and large banks.
Following the announcement in the Union Budget for the year 2014-15, the RBI issued the Small Finance Bank Guidelines in November 2014. Which they have to follow and keeping these guidelines in mind, these banks provide limited banking facilities to their customers.
The Reserve Bank received applications for 72 small finance banks, of which only 10 applications were approved by the RBI on 24 November 2014.
Small Finance Bank is registered under the Companies Act, 2013 as a Public Limited Company which can get listed on the stock market and can receive funding from the public for its capital increase.
These banks provide a complete range of asset and liability to their customers like – Savings Account, Current Account, Fixed Deposit, Recurring Deposit, Locker Facility, ATM and all types of loan products like Vehicle Loan, MSME Loan and SME loan etc.
The main difference between Small Finance Bank and Payment Bank is that Small Finance Bank can give small loans whereas Payment Bank cannot give any loan.
Small Finance Bank Rules & Regulation & Eligibility Criteria
Resident Individuals/Professionals, singly or jointly, each having at least 10 years experience in banking and finance at a senior level and carrying on business of companies and societies in the private sector, which are owned and controlled by Indian residents have less than five years of experience, shall be eligible as promoters to set up small finance banks.
Existing Non-Banking Finance Companies (NBFCs), Micro Finance Institutions (MFIs) and Local Area Banks (LABs) in the private sector, which are controlled by Indian residents and have at least five years of business running experience are also eligible for micro finance You can change your institution in banks.
The minimum paid-up equity capital to start a Small Finance Bank is Rs. Should be 100 crores. However, he has to increase his minimum net worth to Rs 200 crore within 5 years.
Small finance banks will be permitted to open banking outlets subject to the condition that at least 25 per cent of banking outlets shall be opened in unbanked rural areas with a population of 10,000 from the date of commencement of their operations.
Foreign shareholding in Small Finance Banks is revised from time to time as per the Foreign Direct Investment (FDI) policy. Any outsider can make Foreign Direct Investment on the basis of RBI guidelines and FDI rules and regulations.
Leading Small Finance Bank of India
| AU Small Finance Bank | AU Small Finance Bank |
| Fincare Small Finance Bank | Fincare Small Finance Bank |
| Capital Small Finance Bank | Capital Small Finance Bank |
| Ujjivan Small Finance Bank | Ujjivan Small Finance Bank |
| Equitas Small Finance Bank | Equitas Small Finance Bank |
| Suryoday Small Finance Bank | Suryoday Small Finance Bank |
| Utkarsh Small Finance Bank | Utkarsh Small Finance Bank |
| ESAF Small Finance Bank | ESAF Small Finance Bank |
| North East Small Finance Bank | North East Small Finance Bank |
| Jana Small Finance Bank | Jana Small Finance Bank |
Undoubtedly, after the entry of Small Finance Banks into the banking system, banking facilities have reached the remotest parts of India and millions of Indians have been benefitted by it. Today these banks are also providing employment to thousands and lakhs of people, which is considered a good initiative to strengthen the Indian economy.
AU Small Finance Bank is the number 1 bank among small finance banks in India in terms of its marketing strategy, best features and market cap which is known for providing prompt and excellent facilities to its customers. Small finance banks play an important role in the economy of developed and developing countries.
You can take an instant loan, pay someone, deposit payments, use locker facility, do online transactions, transfer money, using credit-debit cards from these banks Can
Notably, these banks are known to offer instant loan against any asset, so you can get an instant loan against any of your existing real estate or gold assets at very low interest rates.