Small finance banks in India serve as specialized banking entities that provide essential banking services to the underserved and unbanked segments of the Indian population, particularly in semi-urban and rural regions. India originally had 12 Small Finance Banks (SFBs). On April 1st, 2024, Fincare Small Finance Bank merged with AU Small Finance Bank. So, as of now, there are a total of 11 SFBs in India i.e.,

1. Capital Small Finance Bank
2. Equitas Small Finance Bank
3. Suryoday Small Finance Bank
4. Utkarsh Small Finance Bank
5. Ujjivan Small Finance Bank
6. ESAF Small Finance Bank
7. AU Small Finance Bank
8. North East Small Finance Bank
9. Jana Small Finance Bank
10. Shivalik Small Finance Bank
11. Unity Small Finance Bank

SFBs emphasizes the government initiative of banking all over the nation. Small finance banks will be registered under the Company Act, 2013 as a public limited company. Take a look at the small finance banks in India with headquarters provided on this page. Candidates preparing for competitive exams, especially bank exams can download this PDF via the link given below. In case of any queries, kindly refer to the FAQs listed below.

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Historical Overview of India's Small Finance Banks

Small Finance banks mainly fulfill the needs of the people who are lower middle class. It provides loans to micro companies, small business sectors, and other underserved entities. Table Below is an overview of small finance banks (SFBs) in India's history.

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History of Small Finance Banks in India
Year	Updates
July, 2014	RBI made guidelines for SFB and got feedback from people.
November, 2014	Final guidelines were proposed by RBI for SFBs.
January, 2015	At this time, Deadlines were issued for interested organizations to apply.
February, 2015	The RBI publishes a list of 72 groups that submitted applications for SFB licenses. A review panel, headed by Usha Thorat, was established to assess the applications.
September, 2015	Ten groups, primarily microfinance NBFCs, were granted temporary licenses by the RBI to transition into small finance banks within a year.
April, 2016	Capital Small Finance Bank was the pioneer in launching its branches.
April, 2021	Shivalik Mercantile Co-operative Bank has been approved by the RBI to be India's inaugural urban co-operative bank to transition into a Small Finance Bank.

 

List of Small Finance Banks in India

Initially, there were 12 Small Finance Banks (SFBs) operating in India. Following the merger of Fincare Small Finance Bank with AU Small Finance Bank on April 1st, 2024, the total number of SFBs in the country has been reduced to 11. Here we have listed the small finance banks of India with headquarters.

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List of Small Finance Banks in India (Year Wise)
S. No	License Holder	Date of Origin	SFBs Name
1	Capital Local Area Bank Ltd	24 April 2016	Capital Small Finance Bank
2	Equitas Holdings Pvt Ltd	5 September 2016	Equitas Small Finance Bank
3	Suryoday Microfinance Pvt Ltd	23 January 2017	Suryoday Small Finance Bank
4	Utkarsh Microfinance Pvt Ltd	23 January 2017	Utkarsh Small Finance Bank
5	Ujjivan Financial Services Pvt Ltd	1 February 2017	Ujjivan Small Finance Bank
6	ESAF(Evangelical Social Action Forum) Microfinance	17 March 2017	ESAF Small Finance Bank
7	Au Financiers India Ltd	19 April 2017	AU Small Finance Bank
8	RGVN North East Microfinance Ltd	17 October 2017	North East Small Finance Bank
9	Janalakshmi Financial Services Pvt Ltd	29 March 2018	Jana Small Finance Bank
10	Shivalik Mercantile Co-operative Bank Ltd	26 April 2021	Shivalik Small Finance Bank
11	Centrum Financial Services Limited and BharatPe	1 November 2021	Unity Small Finance Bank

 

Small Finance Banks in India with Headquarters

Small Finance Bank plays a major role in boosting Indian financial inclusion. Below is the table of headquarters of SFBs in India.

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Small Finance Banks of India with Headquarters
S. No	SFBs Name	Location of Headquarters
1	Capital Small Finance Bank	Jalandhar
2	Equitas Small Finance Bank	Chennai
3	Suryoday Small Finance Bank	Navi Mumbai
4	Utkarsh Small Finance Bank	Varanasi
5	Ujjivan Small Finance Bank	Bangalore
6	ESAF Small Finance Bank	Thrissur
7	AU Small Finance Bank	Jaipur
8	North East Small Finance Bank	Guwahati
9	Jana Small Finance Bank	Bangalore
10	Shivalik Small Finance Bank	Noida
11	Unity Small Finance Bank	Delhi

 

RBI's Guidelines for Small Finance Banks in India

Small Finance Banks of India must adhere to the following guidelines.

• SFB cannot serve as a Business Correspondent(BC) for other banks, but it can establish its own BC network.
• Small Finance Banks are required to have the phrase "Small Finance Bank" in their name.
• The composition of the loan portfolio should be at least 50%, and advances should amount to up to INR 25 lakh.
• Universal Bank transition is permissible as long as the capital/net worth requirements for universal banks are reached.
• The minimum required paid-up equity capital is INR 200 crore.
• RBI approval is required for activities such as distributing mutual funds, as well as offering pension and insurance products.
• 25% of branches need to be located in areas of the country where people need(don’t have) access to banking services.
• Maintaining CRR (Cash Reserve Ratio) and SLR (Statutory Liquidity Ratio) are the reserve requirements to run SFBs.
• The target for SFBs is to achieve 75% of Adjusted Net Bank Credit (ANBC) for eligible priority sector lending.

 

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What are the Objectives of Small Finance Banks in India?

Small Finance Banks of India have specific objectives. I.e., 

• Promoting access to financial services: Small Finance Banks (SFBs) aim to promote financial inclusion by meeting the needs of small business owners, small and marginalized farmers, micro and small-scale industries, and individuals working in the informal sector.
• Choices for saving money: Mainly offering savings options to individuals who do not currently have them.
• Assistance with obtaining credit: Providing lending services to small enterprises, farmers, micro and small-scale industries, and informal sector businesses.
• An alternative establishment: Small finance banks can provide an alternative option to certain established institutions, with their particular focus on serving small and medium enterprises, the informal sector, and small and marginalized farmers. This targeted approach is intended to strengthen financial inclusion initiatives and serve a wide range of underserved customers in rural areas, as well as third and fourth-tier cities and towns.
• An inexpensive, high-tech method: Employing cutting-edge technology to maintain efficient operations and minimize expenses.

 

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Small Finance Banks: What They Do and Can Do(Scope)

The scope of small finance banks is listed below.

• SFBs can contribute to the local economy by participating in community development initiatives.
• Working together with self-help groups to provide small loans and other financial services.
• To educate customers about banking by conducting financial literacy programs.
• Focusing on mobile and online banking to make it easier for customers to use.
• Increasing loans housing and real estate properties.
• Providing banking help to SMEs(small and medium-sized enterprises) and other corporate companies.
• Subjecting to the regulations of RBI, SFBs offer loans and other banking services to the NRIs(Non-Resident Indians).
• Taking part in banking services like savings and current accounts, fixed deposits, sending money, and payment services.
• Provides insurance and pensions to the customers with RBI approval.
• Small finance banks can sell mutual fund units if they get approval from the RBI.
• To provide banking services that are easy to access and efficient by Leveraging high technology and affordable methods.
• Setting up some bank branches in areas without banks to help more people access financial services.
• Giving a large part of their loans to important areas as outlined by the Reserve Bank of India (RBI).
• Giving loans and financial help to small and struggling farmers, tiny businesses, small companies, and other unorganized sectors.
• Small finance banks in India can provide banking services to people who don't have banking access including rural and small-town areas.
• Providing a range of simple banking services like accepting deposits, giving loans, and handling other financial transactions.

 

Regulatory Provisions for Small Finance Banks by RBI (Rules)

Some regulatory provisions that will help the people willing to start small finance banks in India are noted below.

• Current NBFCs, MFIs, and LABs can turn into small finance banks. People, companies, organizations, or groups can support SFBs.
• The Companies Act of 2013 allows SFBs to establish themselves as public companies and the RBI Act of 1934, and the Banking Regulation Act of 1949, along with other related regulations, govern their operations.
• SFBs have the flexibility to operate in various locations, and their mission is to support money-saving efforts for rural residents and to provide loans for nearby businesses.
• SFBs offer 75% of the net loans to important sectors, in addition to granting 50% of loans in the range of ₹25 lakh. Additionally, a minimum paid-up capital requirement of ₹200 crore is necessary.
• The promoters must have 10 years of experience in banking and finance. They begin with a 40% ownership in the bank, which will reduce to 15% in the span of 15 years, from the moment when the bank commences its activities.
• SFBs must list within three years if their net worth is ₹500 crores or more. If it is under that threshold,  they may choose to either list it or opt out.
• According to Foreign Direct Investment(FDI) regulations, SFBs are not allowed to engage in joint partnerships or foreign ownership.

 

Key points to know about Small Finance Banks (SFBs) in India

There are some key points to note down. I.e., the acts applicable to the small finance banks in India are tabled below.

 

Acts applicable to the SFBs in India
S. No	Acts	Uses
1	Companies Act, 2013.	SFBs will be registered as a public limited company.
2	Banking Regulation Act, 1949.	SFBs will be licensed under section 22 of this act.
3	Foreign Exchange Management Act, 1999.	Foreign financial transactions or trades are carried out according to the rules of this act.
4	Reserve Bank of India Act, 1934.	SFBs are governed by the RBI Act of 1934
5	Payment & Settlement Systems Act, 2007.	It sets rules for payment systems in India but RBI is the authority to supervise and manage these systems and the associated matters.
6	Credit Information Companies (Regulation) Act, 2005.	RBI monitors the SFB's legal and official duties based on this act.
7	Deposit Insurance and Credit Guarantee Corporation Act, 1961.	It delivers insurance for bank deposits, offering a safety net for customers whose banks cannot return their cash.

 

FAQs

Q: How many small finance banks in India?

As of April 1, 2024, there is a total of 11 SFBs in India.

Q: Where is the headquarters of Equitas small finance bank in India?

The headquarters of Equitas small finance bank in India is located in Chennai, Tamilnadu.

Q: Where you can download the small finance banks in India PDF?

On this page, You can download the small finance banks of India with headquarters PDF.

Q: When and which SFB originated first?

Capital Small Finance Bank was first originated SFB on 24 April 2016.

Q: Who governs the small finance banks in India?

The Reserve Bank of India(RBI) governs the SFBs in India.