List of Small Finance Banks in India: Check Complete Details

List of Small Finance Banks in India:

The list of small finance banks in India is available here. For bank exam preparation, candidates should prepare more Banking terms and the latest news about the bank industry. For that, we will provide you the study materials for Banking Awareness in a regular manner. Here the list of Small Finance Banks in India is available for your effective preparation. Here we have added the aim, regulations, functions, History, norms, capital requirement, and other important information regarding the list of Small Finance Banks in India with their Headquarters. In the upcoming bank Examinations 2021, Candidates can use this study material on the list of small finance banks in India and their headquarters pdf. So that you can easily answer any question related to the list of small finance banks in the upcoming bank exams.

List of Small Finance Banks in India – Aim: 

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 unorganized sector entities. Small finance banks are a type of niche banks in India. Like other commercial banks, these banks can undertake all basic banking activities including lending and taking deposits.

  • Paid-Up Capital: 200 crore

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List of Small Finance Banks in India – Regulations:

The small finance banks shall be registered as a public limited company under the Companies Act, 2013. It will be licensed under Section 22 of the Banking Regulation Act, 1949. The Small Finance Banks in India are governed by the provisions of the:

  • Banking Regulation Act, 1949.
  • Reserve Bank of India Act, 1934.
  • Foreign Exchange Management Act, 1999
  • Deposit Insurance and Credit Guarantee Corporation Act, 1961
  • Payments and Settlements Act,2007
  • Credit Information Companies (Regulation) Act,2005
  • Other relevant Statutes and the Directives, Prudential Regulations and other Guidelines/Instructions issued by RBI and other regulators from time to time.

The small finance banks will be given scheduled bank status once they commence their operations, and found suitable as per Section 42 (6) (a) of the Reserve Bank of India Act, 1934.

List of Small Finance Banks in India – Functions:

The functions of the list of small finance banks in India are,

  • Acceptance of all type of deposits and lending loans to unbanked areas of our country.
  • Maintenance of Cash Reserve Ratio and Statutory Liquidity Ratio.
  • The basic objective for the setting up of SFBs are to provide credit facilities to small business units, small farmers, micro and small industries, and unorganized sectors and reform to improve financial inclusion in the country.
  • It also provides loans to the priority sector and motivates people to save their excess funds.
  • SFBs can provide financial services like mutual funds, insurance, and pension products but with the prior approval of RBI.

List of Small Finance Banks in India – History:

Small Finance Banks are the type of niche banks in India. The main objective of these to provide financial inclusion to sections of the financial services not being served by other banks, such as small business units, small and marginal farmers, micro and small industries, and unorganized sectors. Banks with a small finance bank license can provide basic banking service of acceptance of deposits and lending.

The Reserve Bank of India released the draft guidelines for small finance banks, seeking comments from 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.

List of Small Finance Banks in India – Capital Requirement:

The minimum paid-up equity capital for small finance banks shall be Rs. 200 crore. The promoter’s minimum initial contribution to the paid-up equity capital of such small finance bank shall at least be 40 percent and gradually brought down to 26 percent 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.

List of Small Finance Banks in India – Eligible promoters:

  1. Resident individuals/professionals with 10 years of experience in banking and finance; and Companies and Societies owned and controlled by residents will be eligible as promoters to set up small finance banks.
  2. 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.
  3. Promoter/promoter groups should be ‘fit and proper’ with a similar 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.

List of Small Finance Banks in India – Norms:

  • The list of small finance banks in India will be subject to all prudential norms and regulations of RBI as applicable to existing commercial banks including the 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 percent of their Adjusted Net Bank Credit (ANBC) to the sectors eligible for classification as priority sector lending (PSL) by the Reserve Bank.
  • At least 50 percent of its loan portfolio should constitute loans and advances of up to Rs. 25 lakh.

List of Small Finance Banks in India – Contribution of Promoters:

  1. If the initial shareholding by the promoter in the bank is in excess of 40 percent, it should be brought down to 40 percent within a period of five years. The promoter’s minimum contribution of 40 percent of paid-up equity capital shall be locked in for a period of five years from the date of commencement of business of the bank.
  2. Then the promoter’s stake should be brought down to 30 percent of the paid-up equity capital of the bank within a period of 10 years, and to 26 percent within 12 years from the date of commencement of business of the bank.

List of Small Finance Banks in India – FDI:

  1. Following the current FDI policy, the aggregate foreign investment in a private sector bank from all sources will be allowed up to a maximum of 74 percent of the paid-up capital of the bank. At all times, at least 26 percent of the paid-up capital will have to be held by residents.
  2. In the case of Foreign Institutional Investors (FIIs) / Foreign Portfolio Investors (FPIs), individual FII / FPI holding is restricted to below 10 percent of the total paid-up capital, the aggregate limit for all FIIs /FPIs / Qualified Foreign Investors (QFIs) cannot exceed 24 percent of the total paid-up capital, which can be raised to 49 percent of the total paid-up capital by the bank concerned through a resolution by its Board of Directors followed by a special resolution to that effect by its General Body.

List of Small Finance Banks in India – Transition Path:

  • If the list of small finance banks in India aspires to transit into a universal bank, such transition will not be automatic but would be subject to it applying to RBI for such conversion and fulfilling minimum paid-up capital / net worth requirement as applicable to universal banks.
  • Its satisfactory performance as a small finance bank for a minimum period of five years and the outcome of RBI’s due diligence exercise. On transition into a universal bank, it will be subjected to all the norms including NOFHC structure as applicable to universal banks.

Difference Between Bank & Small Finance Banks:

Particulars Bank Small Finance Bank
Loan Commercial Bank can offer loans to all the customers Small Finance Bank should provide 75% of the loans to the priority sectors.
Revenue Commercial Bank can earn revenue by loans and transaction charges The main source of income for Small Finance Banks is by lending services to the target customers
Branches Commercial Bank can open branches anywhere within the country It should focus on the rural areas for the first three years of establishment.
Who can Promote As per guidelines issued by RBI Individuals/professionals having 10 years of experience in finance, NBFCs, microfinance companies, local area banks, etc.
Credit Cards Can Issue Can Issue
Debit Cards Can Issue Debit and ATM Card Can Issue Debit and ATM Card
Target customers Not restricted to any region MSME, Small Farmers, Small Businessman, Unorganized Workers, etc.

 Small Finance Banks List and Headquarters and Taglines:

Here we have added the list of all small finance banks in India. So that, you can study for the banking exams easily. In many bank exams, there are high chances that you may get to face questions related to the list of small finance banks in India and their headquarters pdf. So, study this Small Finance Banks List and Headquarters and Taglines.

Bank Headquarters Tagline
AU Small Finance Bank Jaipur Chalo Aage Badhe
Capital Small Finance Bank Jalandhar, Punjab Vishwas se Vikas tak
Equitas Small Finance Bank Chennai It’s Fun Banking
ESAF Small Finance Bank Thrissur, Kerala Joy of Banking 
Fincare Small Finance Bank Bengaluru Banking On More 
Jana Small Finance Bank Bengaluru Paise Ke Kadar
Suryoday Small Finance Bank Navi Mumbai A Bank of Smiles 
Ujjivan Small Finance Bank Bengaluru Bharosa, Aake bharose par 
Utkarsh Small Finance Bank Varanasi Apki Umeed ka Khata
North East Small Finance Bank Guwahati Your Door Step Banker 

List of Small Finance Banks in India – FAQs:

Here we have added some FAQs regarding the list of small finance banks in India.

Q: How many small finance banks are there in India?

A: There are 10 small finance banks in India.

 

Q: Which is the largest small finance bank in India?

A: AU Small Finance Bank is the largest small finance bank in India.

 

Q: What is difference between small finance bank and bank?

A: The list of small finance banks in India provides services to small business units, marginal farmers, unorganized sector entities, micro, and small industries through low-cost operations. But the Scheduled Commercial banks provide banking services to every section.

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