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SMALL FINANCE BANK


                          SMALL FINANCE BANK

Small finance banks are a type of niche banks in India. Banks with a small finance bank license can provide basic banking service of acceptance of deposits and lending. The aim behind these to provide financial inclusion to sections of the economy not being served by other banks, such as small business units, small and marginal farmers, micro and small industries and unorganised sector entities.
                                      The Reserve Bank of India released the draft guidelines for small finance banks, seeking comments for interested entities and the general public. There were 72 applications received from the different entities for seeking the small finance bank license in February 2015. It was also announced that an external advisory committee headed by Usha Thorat will evaluate the license applications.

 Regulations

  • Existing non-banking financial companies (NBFC), microfinance institutions (MFI) and local area banks (LAB) can apply to become small finance banks.

  • They can be promoted either by individuals, corporate, trusts or societies.

  • They are established as public limited companies in the private sector under the Companies Act, 1956.

  • They are governed by the provisions of Reserve Bank of India Act, 1934, Banking Regulation Act, 1949 and other relevant statutes.

  • The banks will not be restricted to any region.

  • 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.

  • 75% of its net credits should be in priority sector lending and 50% of the loans in its portfolio must in ₹25 lakh  range.

  • The firms must have a capital of at least ₹200 crore .

  • 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.

  • At net worth of ₹500 crore  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

Important features of Small Banks:
  • Unlike payment banks, small finance banks will be allowed to lend money also.
  • For the initial 3 years, prior approval will be required for branch expansion.
  • To give the feel of local bank, their area of operation will be restricted.
  • NBFC’s , any individual with 10 years of experience in banking can apply for licenses.
  • Their target are small businesses and MSMEs.
  • They are not allowed to lend the deposited money to big businesses or industries.

Name of the Small Financial bankHead quartersKey PeopleTagline
Au Small Finance Bank Limited(AUBANK)Jaipur, RajasthanMr. Sanjay Agarwal(CEO & MD)‘Chalo Aage Badhe’
Capital Lab Small Finance BankJalandar ,PunjabSarvjit Singh Samra( MD)Viswas se Vikas tak’
Equitas Small Finance BankChennai, TamilNaduPN Vasudevan(CEO & MD)Its Fun Banking’
ESAF Small Finance BankThrissur , KeralaK. Paul Thomas(CEO & MD) ,Raveendranathan Prabha(Chairman)Joy of Banking’
FINCARE Small Finance Bank Limited(formed from Disha Microfin Limited)Bengaluru , KarnatakaRajeev Yadav(CEO & MD)‘a new era in smartbanking begins’
Janalakshmi Small Finance BankBengaluru , KarnatakaRamesh Ramanathan(Chairman) , Ajay Kanwal (CEO)Likho Apni Kahaani
North East Small Finance Bank(NESFB)-RGVN Micro Finance Ltd.Guwahati , AssamDEEP CHANDRA JOSHI( chairman) ,Rupali Kalita (MD  )Your Door step Banker’
Suryoday Small Finance BankNavi MumbaiMr. R Baskar Babu(CEO & MD)A bank of smiles
Ujjivan Small Finance BankBengaluru, KarnatakaSunil Patel(chairman) , Samit Ghosh (CEO & MD)We believe in your belief
Utkarsh Small Finance BankVaranasi , U.PGovind Singh(CEO & MD)Aapki Umeed Ka Khata’