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Small Finance Banks
Why is it in the news
- As per the recent Data from RBI, the small finance banks, in total, saw their deposits grow 31.6% in the third quarter (ended December) of the last financial year.
- The sector has seen remarkable growth in credit disbursement as well as deposits, albeit on a low base.
More in the news
- On a year-on-year basis, the growth was 193.4%.
- The previous quarters saw even faster growth, with Q2 at 306%, Q1 at 331%.
- This phenomenal growth, however, has come on a very small base and that’s perhaps why the bigger banks and NBFCs don’t see small finance banks as a competition just yet.
- In context, the ₹30,000 crore of deposits (as of December end) in small finance banks makes up just 0.2% of the deposits in all scheduled commercial banks.
Small Finance Banks:
- Small finance banks are banks with a differentiated bank license from the RBI.
- The objective behind the Small finance banks is to promote financial inclusion.
- They primarily undertake basic banking activities of acceptance of deposits and lending to unserved and underserved sections.
- These sections includes small business units, small and marginal farmers, micro and small industries and unorganised sector entities.
- They lend 75% of their total adjusted net bank credit to priority sector.
Source
The Hindu.