Hello and welcome to exampundit. Today we are sharing all the important information about Small Finance Banks in India. This is important for all the upcoming Bank and Insurance Exam General Awareness.
We will discuss about Small Finance Banks, their regulations, limits, functions and Small Finance Banks in India with their Headquarters.
Features of Small Finance Banks
Key features of the Small Finance Bank guidelines are:
The objectives of setting up of small finance banks will be to further financial inclusion by (a) provision of savings vehicles, and (ii) supply of credit to small business units; small and marginal farmers; micro and small industries; and other unorganised sector entities, through high technology-low cost operations.
Resident individuals/professionals with 10 years of experience in banking and finance; and companies and societies owned and controlled by residents will be eligible to set up small finance banks. Existing Non-Banking Finance Companies (NBFCs), Micro Finance Institutions (MFIs), and Local Area Banks (LABs) that are owned and controlled by residents can also opt for conversion into small finance banks. Promoter/promoter groups should be ‘fit and proper’ with a sound track record of professional experience or of running their businesses for at least a period of five years in order to be eligible to promote small finance banks.
Scope of activities
- The small finance bank shall primarily undertake basic banking activities of acceptance of deposits and lending to unserved and underserved sections including small business units, small and marginal farmers, micro and small industries and unorganised sector entities.
- There will not be any restriction in the area of operations of small finance banks.
The minimum paid-up equity capital for small finance banks shall be Rs. 100 crore.
The promoter’s minimum initial contribution to the paid-up equity capital of such small finance bank shall at least be 40 per cent and gradually brought down to 26 per cent within 12 years from the date of commencement of business of the bank.
The foreign shareholding in the small finance bank would be as per the Foreign Direct Investment (FDI) policy for private sector banks as amended from time to time.
- The small finance bank will be subject to all prudential norms and regulations of RBI as applicable to existing commercial banks including requirement of maintenance of Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR). No forbearance would be provided for complying with the statutory provisions.
- The small finance banks will be required to extend 75 per cent of its Adjusted Net Bank Credit (ANBC) to the sectors eligible for classification as priority sector lending (PSL) by the Reserve Bank.
- At least 50 per cent of its loan portfolio should constitute loans and advances of upto Rs. 25 lakh.
List of Small Finance Banks and Headquarters
|Au Small Finance Bank||Jaipur|
|Capital Local Area Bank||Jalandhar|
|Fincare Small Finance Bank (Disha Microfin Private)||Ahmedabad|
|Equitas Small Finance Bank||Chennai|
|ESAF Small Finance Bank||Chennai|
|Janalakshmi Financial Services||Bengaluru|
|RGVN (North East) Microfinance||Guwahati|
|Suryoday Small Finance Bank||Navi Mumbai|
|Ujjivan Small Finance Bank||Bengaluru|
|Utkarsh Small Finance Bank||Varanasi|
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