As of 2024, the Small Finance Banks(SFB) in India continue to serve as pivotal institutions aimed at enhancing financial inclusion, especially in underserved and unbanked parts of the country. These banks accept deposits and lend, primarily targeting marginal farmers, micro, small, and medium enterprises (MSMEs), and small business units, thereby facilitating economic growth in rural and semi-urban areas.
How Many Small Finance Banks in India? It apprises that till date, 12 Small Finance Banks are operational in the country. These banks were set up with an objective of undertaking basic banking activities for the un-served or under-served sections, including small business units, low-income households, and migrant workers in rural areas to achieve the goal of higher financial inclusion in the country.
| Aspect | Details | |
|---|---|---|
 | Total Number of SFBs | 12 Small Finance Banks (as of the latest data available) |
| Purpose | To provide financial inclusion through basic banking facilities to the unbanked or underbanked section. | |
| Examples of SFBs | AU Small Finance Bank, Equitas Small Finance Bank, Ujjivan Small Finance Bank etc. | |
 | Regulatory Authority | Regulated by the Reserve Bank of India, RBI. |
Features of small finance banks in India:
Acceptance of Deposits: SFBs can accept all kinds of deposits.
Lending Activities: SFBs are allowed to undertake lending activities.
Branch Expansion: Prior approval from the RBI is required for branch expansion during the initial three years.
Area of Operation: SFBs primarily operate in unserved rural areas.
Priority Sector Lending (PSL): They allocate 75% of loans to priority sector lending (PSL), further contributing to financial inclusion.
There are in all 12 Small Finance Banks in India as of 2024.
Here’s a concise overview of some Small Finance Banks in India, including their concepts, managing directors, headquarters, and taglines:
Eligible promoters for setting up Small Finance Banks (SFBs) in India include the following:
- Resident Individuals/Professionals:
- Indian citizens with at least 10 years of experience in banking and finance at a senior level.
- Companies and Societies in the Private Sector:
- Residents (as defined in FEMA Regulations, as amended from time to time) must own and control these entities.
- They should have a successful track record of running their businesses for at least a period of five years.
AU Small Finance Bank
- Managing Director: Sanjay Agarwal
- Headquarters: Jaipur, Rajasthan
- Tagline: “Chalo Aage Badhein”
Equitas Small Finance Bank
- Managing Director: PN Vasudevan
- Headquarters: Chennai, Tamil Nadu
- Tagline: “It’s Fun Banking”
Ujjivan Small Finance Bank
- Managing Director: Ittira Davis
- Headquarters: Bengaluru, Karnataka
- Tagline: “Bharosa, Aap Ke Bharose Par”
Utkarsh Small Finance Bank
- Managing Director: Govind Singh
- Headquarters: Varanasi, Uttar Pradesh
- Tagline: “Apki Umeed Ka Khata”
Fincare Small Finance Bank
- Managing Director: Rajeev Yadav
- Headquarters: Bengaluru, Karnataka
- Tagline: “Banking on More”
Suryoday Small Finance Bank
- Managing Director: Baskar Babu Ramachandran
- Headquarters: Navi Mumbai, Maharashtra
- Tagline: “A Bank of Smiles”
Capital Small Finance Bank
- Managing Director: Sarvjit Singh Samra
- Headquarters: Jalandhar, Punjab
- Tagline: “Vishwas Se Vikas Tak”
ESAF Small Finance Bank
- Managing Director: K. Paul Thomas
- Headquarters: Thrissur, Kerala
- Tagline: “Joy of Banking”
North East Small Finance Bank
- Managing Director: Rupali Kalita
- Headquarters: Guwahati, Assam
- Tagline: “Your DoorStep Banker”
Jana Small Finance Bank
- Managing Director: Ajay Kanwal
- Headquarters: Bengaluru
- Tagline: “Paise Ke Kadar”
Shivalik Small Finance Bank Ltd
- Managing Director: Anshul Swami
- Headquarters: Noida, Uttar Pradesh
- Tagline: “Empowering Tomorrow”
Unity Small Finance Bank Ltd
- Managing Director: Inderjit Camotra
- Headquarters: New Delhi
- Tagline: “India’s 1st Truly Digital Bank”
- The scope for expanding Small Finance Banks(SFBs) has increased in the last 5 years. The semi-urban areas and the rural markets where the banking needs are unmet are the segments and the geographical areas where the small finance banks could expand.
- Small Finance Banks growth is expected to decelerate to 26% this fiscal year from 28% previously. The credit growth in the SFBs is expected to around 40%, with diversification in loans such as mortgage and vehicle loans.
- Experts project that SFBs will grow their advances by 25-27% this fiscal year. In the last 5 years, SFBs have increased, reaching approximately 7,400 branches.
- After the pandemic related surge in the deposits, community bank balance sheets are no longer flush. Interest rates at direct banks have topped 4%, intensifying competition for deposits.
- Adopting and managing technologies for SFBs is crucial for SFBs. Balancing innovation with regulatory compliance and cost effectiveness can be challenging.
How many local area banks are there in India?
Public limited companies register these banks under the Companies Act, 2013, and the provisions of the Reserve Bank of India Act of 1934 govern them. They aim to extend credit facilities to small farmers, micro and small industries, and other unorganized sector entities, promoting financial inclusion by providing banking services to tier 3 and tier 4 areas, i.e., rural and semi-urban areas.
