What is Small Finance Bank?

Hey. You can understand what is small finance bank in India through this answer. They were set up to further expand the services offered by banks in unserved areas of India. I have talked about this subject in detail. So, you can read below and understand the meaning and importance of small finance banks.

What do you mean by Small Finance Bank?

Under the guidance of the Indian government, the RBI has brought up a new segment in the banking sector, which is recognised as a small finance bank. So, these small finance banks started to expand the banking services to the underserved, as well as the unserved portion. This includes small businesses, micro and small industries, small farmers and more. 

These financial institutions are equipped with the capabilities to offer services, such as lending and allowing customers to deposit money. The announcement for small finance banks was made at the time of the 2014-15 Union Budget. The guidelines for such banks were issued by the RBI in November 2014. Close to 72 institutions had applied for the licence, but only 10 of them were given the licence. 

This move has helped the banking services to be spread across the country in regions where there was no such facility before. People in rural areas can enjoy banking services in their towns and villages, which has eased the process for them to a great level.

As far as their work is concerned, they function as savings entities. They offer credit facilities to small businesses, industries and farmers.

So that’s all from my end regarding the meaning of small finance bank. I hope you now understand small finance banks in a better way. 

Most of us are yet to know what is small finance bank is so let me help you out. Small Finance banks are a specific segment of bank that furnishes financial inclusion to sections of the economy that fail to be served by other banks. For eg: small business units, small and marginal farmers, micro and small enterprises and unorganised sector entities.

People often ask what is a small finance bank and its aims, so here it goes:

• To strengthen the financial inclusion by providing banking services like deposits and supply of credit across the nation

• They acts as a financial institution that gives financial services to the unreserved and unbanked places in India

• This type of banks are registered under the Companies Act 2013 as a public limited company

The motive behind the creation of such banks is to strengthen the economy of our Nation. It has been designed by the Reserve Bank of India. They also provide home loans.

• Ujjivan Small Finance Bank

• Jana Small Finance Bank

• Equitas Small Finance Bank

• AU Small Finance Bank

• Capital Small Finance Bank

• Fincare Small Finance Bank

• ESAF Small Finance Bank

• North East Small Finance Bank

• Suryoday Small Finance Bank

• Utkarsh Small Finance Bank

I hope I have been able to answer what is small finance bank and its aims.

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