- SFBs are niche banks (banks that focuses and serves the needs of a certain demographic segment of the population).
- SFBs are scaled down versions of commercial banks, with both deposit-taking and loan making functions.
- They can supply credit to MSMEs, agriculture and banking services in unbanked and under-banked regions in the country.
- SFBs can sell FOREX, mutual funds, insurance, pensions and can also convert into a full-fledged bank
- SFBs was recommended by the Nachiket Mor Committee on financial inclusion.
Who can open a SFB?
- Resident individuals/professionals carrying 10 years of experience in banking and finance and companies and societies owned and controlled by residents will be eligible to set up small finance banks.
- SFBs have a minimum paid up capital of Rs.100 crore.