Small Finance Banks in India 2023: Small finance banks (SFBs) are a type of specialized banks in India that have been granted licenses by the Reserve Bank of India (RBI) to provide basic banking services to unserved and underserved sections of the population, including small farmers, micro-enterprises, and low-income households. SFBs can accept deposits, provide loans, and offer other banking services, but they cannot engage in large-scale corporate lending or investment banking activities.
The purpose of SFBs is to increase financial inclusion by providing access to banking services to those who have traditionally been excluded from the formal banking system. As of 2023, there are 12 Small Finance Banks in India. Many small business holders or people not having credit facilities can avail of banking credit from these small finance banks. Small finance banks provide lending facilities to SMEs, unorganized sectors, Small Industries, Shop holders, and Small business holders.
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List of Small Finance Banks in India
|Bank Name||Headquarter||Tagline||MD/ CEO/ CMD||Non-Exe Chairman/Chairman|
|AU Small Finance Bank||Jaipur, Rajasthan||Chalo Aage Badhe||Mr. Sanjay Aggarwal||Mr. Raj Vikash Verma|
|Equitas Small Finance Bank||Chennai||It’s Fun Banking||Mr. P N Vasudevan||Mr. Rangachary N|
|ESAF Small Finance Bank||Thrissur, Kerala||Joy Of Banking||K. Paul Thomas (MD & CEO)||Mr. P R Ravi Mohan|
|Fincare Small Finance Bank||Ahmedabad||A New Era in Smart Banking Begins||Mr. Rajeev Yadav||Mr. Pramod Kabra|
|Jana Lakshmi Small Finance Bank||Bengaluru||Likho Apni Kahani||Mr. Ajay Kanwal||Mr. Ramesh Ramanathan|
|Capital Small Finance Bank (1st Small Finance Bank)||Jalandhar, Punjab||Vishwas Se Vikas Tak||Mr. Sarvjit Singh Samra||Mr. Madan Gopal Sharma|
|Ujjivan Small Finance Bank||Bengaluru||We believe in your belief||Ittira Davis||Mr. Banavar Anantharamaiah Prabhakar|
|Unity Small Finance Bank Limited||New Delhi||Inderjit Camotra|
|Utkarsh Small Finance Bank||Varanasi||Aapki Umeed Ka Khata||Mr. Govind Singh||—|
|Suryoday Small Finance Bank||Navi Mumbai||A Bank Of Smile||Mr. Baskar Babu Ramachandran||Mr. Ramachandran Rajaraman|
|Shivalik Small Finance Bank Limited||Saharanpur, Uttar Pradesh||A Bank For Your Welfare||Suveer Kumar Gupta|
|North East Small Finance Bank||Guwahati||Your Door Step Banker||Ms. Rupali Kalita||—|
The function of small finance bank
The primary function of small finance banks (SFBs) in India is to provide access to basic banking services to unserved and underserved segments of the population, including small farmers, micro-enterprises, and low-income households. This is done by providing a range of banking products and services such as:
- Accepting deposits: SFBs can accept various types of deposits, including savings, current, and term deposits.
- Providing loans: SFBs can provide loans for various purposes, including agriculture, micro-enterprises, housing, and personal loans to individuals and small businesses.
- Payment and settlement services: SFBs can provide various payment and settlement services, including electronic fund transfers, direct debit, and bill payments.
- Other banking services: SFBs can also offer other banking services, such as issuing debit cards, credit cards, and cheque books.
- The main goal of SFBs is to increase financial inclusion and promote the growth of micro and small enterprises by providing access to affordable credit, savings and other banking facilities to the unbanked and underbanked population.
List of Small Finance Banks in India
The small banks are to provide a whole suite of basic banking products such as deposits and supply of credit but in a limited area of operation.
Key features of the Small Finance Bank guidelines are:
i)Existing non-banking financial companies (NBFC), microfinance institutions (MFI) and local area banks (LAB) can apply to become small finance banks.
ii) They can be promoted either by individuals, corporate, trusts or societies.
iii) They are established as public limited companies in the private sector under the Companies Act, 1956.
iv) They are governed by the provisions of Reserve Bank of India Act, 1934, Banking Regulation Act, 1949 and other relevant statutes.
v) The banks will not be restricted to any region.
vi) They were set up with the twin objectives of providing an institutional mechanism for promoting rural and semi urban savings and for providing credit for viable economic activities in the local areas.
vii) 75% of its net credits should be in priority sector lending and 50% of the loans in its portfolio must in ₹25 lakh (US$38,000) range.
viii) The firms must have a capital of at least ₹100 crore (US$15 million).
ix) The promoters should have 10 years’ experience in banking and finance. The promoters stake in the paid-up equity capital will be at least 40% initially but must be brought down to 26% in 12 years. Joint ventures are not permitted. Foreign share holding will be allowed in these banks as per the rules for FDI in private banks in India.
x) At net worth of ₹500 crore (US$77 million), listing will be mandatory within three years. Small finance banks having net worth of below ₹500 crore (US$77 million) could also get their shares listed voluntarily.
xi) They can accept any deposit (savings, current, fixed deposits, recurring deposits) like commercial banks.
xii) Unlike payment banks, small finance banks will be allowed to lend money also.
xiii) For the initial 3 years, prior approval will be required for branch expansion.
xiv) To give the feel of local bank, their area of operation will be restricted.
xv) They are not allowed to lend the deposited money to big businesses or industries.
FAQ on List of Small Finance Banks in India
Q. Are Small Finance Banks approved by RBI?
Ans: All Small Finance Banks in India, are approved by the Reserve Bank of India under the Banking regulations Act of 1949. These Banks are accustomed to following the rules and patterns set by the RBI, similar to all other banks.
Q. Is it safe to open an FD in a Small Finance Bank?
Ans: Unlike commercial banks, small finance banks also provide fixed deposits. Also, since these banks are newly established, they usually offer higher interest rates on FD than other commercial banks in order to attract more customers. Also, these FDs are equally safe and sound.
Q. Which is the No 1 small finance bank in India?
Ans: Here are the top 10 small finance banks in India that offer competitive interest rates for fixed deposits: Ujjivan Small Finance Bank Fixed Deposit. Jana Small Finance Bank Fixed Deposit. Equitas Small Finance Bank Fixed Deposit.
Q. Is it safe to invest in small finance banks?
Ans: Small finance banks generally offer a higher interest rate as compared to universal banks. Thus, guided and regulated by RBI, it is pretty safe to invest in FDs offered by private and small finance banks.
How many small Finance banks are there in India? Ans is 10.. It is a good idea to include the NON BANKED CITIZENS.
Au Small Finance Bank Ltd.
Capital Small Finance Bank Ltd
Fincare Small Finance Bank Ltd.
Equitas Small Finance Bank Ltd
ESAF Small Finance Bank Ltd.
Suryoday Small Finance Bank Ltd.
Ujjivan Small Finance Bank Ltd.
Utkarsh Small Finance Bank Ltd.
North East Small finance Bank Ltd
Jana Small Finance Bank Ltd
Shivalik Small Finance Bank Ltd
Unity Small Finance Bank Ltd