Small Finance Banks in India
What are Small Finance Banks?
In India, small finance banks are a more recent institution that was established to cater to the unbanked and underserved populace. By providing basic banking and credit services, their primary objective is to encourage financial inclusion. In 2015, the RBI granted them their first license, which aided in their nationwide expansion. There are now twelve small finance banks in operation in India.
Small Finance Bank Benefits
- Higher Interest Rates - When compared to traditional banks, SFBs frequently provide higher interest rates on fixed deposits and savings accounts.
- Focused Customer Service - They offer individualized services to low-income organizations, small businesses, and farmers.
- Improved Financial Inclusion - SFBs can reach underprivileged communities, particularly in rural and semi-urban areas.
- Easy Credit Access - They offer small loans to self-employed individuals, microbusiness owners, and those who would not be eligible at larger banks.
- Basic Banking Services - SFBs concentrate on providing first-time account users with straightforward, easy-to-use banking services.
Top 10 Small Finance Banks in India (2025)
Small Finance Bank | Foundation Year / Previous Legal Form Started | Operations Initiation as SFB |
Capital Small Finance Bank | 2000 (as Capital Local Area Bank) | April 2016 |
Equitas Small Finance Bank | 2007 (as Equitas Microfinance Pvt. Ltd) | September 2016 |
AU Small Finance Bank | 1996 (as AU Financiers / NBFC) | April 2017 |
ESAF Small Finance Bank | 1992 (as ESAF Microfinance) | March 2017 |
Suryoday Small Finance Bank | 2005 (as Suryoday Microfinance Pvt Ltd) | January 2017 |
Utkarsh Small Finance Bank | 2009 (as Utkarsh Microfinance) | January 2017 |
Ujjivan Small Finance Bank | 2005 (as Ujjivan Financial Services Pvt Ltd) | February 2017 |
Jana Small Finance Bank | 2008 (as Janalakshmi Financial Services) | March 2018 |
North East Small Finance Bank | 2017 (as RGVN Microfinance Ltd) | October 2017 |
Unity Small Finance Bank | 2021 (license holder – Unity SFB took over parts of PMC Bank) | November 2021 |
Operating Rules for Small Finance Banks
- Serve underserved and unbanked groups to advance financial inclusion.
- Must comply with the Companies Act and be registered as a public limited company.
- A minimum of ₹200 crore in paid-up capital, with the promoter initially owning at least 40% of it.
- It is recommended that at least 50% of loans be up to ₹25 lakh in order to target small borrowers.
- Assign priority sectors 75% of Adjusted Net Bank Credit (ANBC).
- Make sure rural areas without access to banking services have a minimum of 25% of branches.
- Permitted to take deposits and provide loans; nevertheless, lending to big corporations is prohibited.
- Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) must be maintained.
- Within three years of having a net worth of more than ₹500 crore, one must list on stock exchanges.
- Fully regulated by the RBI and adhering to audit, AML, and KYC standards.
What is the difference between NBFC and Small Finance Bank?
Aspect | NBFC (Non-Banking Financial Company) | Small Finance Bank (SFB) |
Regulatory Authority | Regulated by RBI, but not under full Banking Regulation Act | Regulated by RBI under Banking Regulation Act, 1949 |
Accepting Deposits | Cannot accept demand deposits (like savings accounts) | Can accept all types of deposits (savings, current, FDs, RDs) |
Payment Instruments | Cannot issue cheques or debit cards | Can issue cheques, debit cards, net banking, etc. |
CRR & SLR Requirements | Not required to maintain CRR or SLR | Must maintain CRR and SLR, like other scheduled banks |
Deposit Insurance | Deposits are not insured by DICGC | Deposits are insured up to ₹5 lakh under DICGC |
FAQs on Small Finance Banks
- Are Small Finance Banks safe?
Yes, SFBs are regulated by the Reserve Bank of India (RBI) and covered under DICGC insurance, which protects deposits up to ₹5 lakh per depositor.
- Can I open a savings account in a Small Finance Bank?
Absolutely! SFBs offer savings accounts, current accounts, fixed deposits, and recurring deposits—often with higher interest rates than traditional banks.
- Do Small Finance Banks offer online banking?
Yes, most SFBs provide internet banking, mobile banking apps, UPI services, and online account opening with e-KYC.
- Who can open an account in a Small Finance Bank?
Any individual (resident or non-resident), business, or small enterprise meeting the bank’s KYC requirements can open an account.
- Can I get a debit card from a Small Finance Bank?
Yes, most SFBs issue Rupay or Visa debit cards along with their savings or current accounts.
Disclaimer
Credit Card:
Credit Score:
Personal Loan:
Home Loan:
Fixed Deposit:
Copyright © 2026 BankBazaar.com.