About Small Finance Banks (SFBs)
- SFBs are financial institutions whose primary purpose is to further financial inclusion by providing banking services to unserved and underbanked regions of the country.
- They are registered as a public limited company under the Companies Act, 2013.
- Purpose: The main purpose behind having small finance banks is to expand access to financial services in rural and semi-urban areas. These banks can do almost everything that a normal commercial bank can do, but at a much smaller scale. It offers basic banking services, accept deposits and lend to underserved sections of customers, including small business units, small and marginal farmers, micro and small industries, and even entities in the unorganized sector.
- These banks are governed by the provisions of the:
- Banking Regulation Act, 1949
- Reserve Bank of India Act, 1934
- Foreign Exchange Management Act, 1999
- Payment and Settlement Systems Act, 2007
- Credit Information Companies (Regulation) Act, 2005
- Deposit Insurance and Credit Guarantee Corporation Act, 1961
- Other relevant Statutes and the Directives, Prudential Regulations and other Guidelines/Instructions issued by Reserve Bank of India (RBI) and other regulators from time to time.
