Small finance banks : A Step ahead for unbanked areas

Abstract

Banking sector shapes the economy for development and growth. In India there is a long track record of banks starting with the RBI, presidency banks, network of commercial banks, development of co-operating banks, and establishment of private banks. In spite of this, the need for reaching the under-banked areas and lower section of the population is still felt. To fulfill this need, the new era of small finance banks has emerged in last two decades. The present article is an overview about beginning and development of small finance banks

Small banks are physical banks with a limited region of operation with the goal of providing basic banking products such as pigmy deposits and small loans. Small banks are supposed to use high-tech, low-cost operations to address the loan and remittance needs of small enterprises, farmers, micro and small industries, the unorganized sector, low-income households, and migratory workers. Small Finance Banks (SFBs) are a new form of bank that was launched into the Indian banking system in 2015 to cater to the specialized needs of niche consumers. These banks are working to expand basic banking services and increase financial inclusion in the country.