Small Finance Bank – Features & Regulation In India?
The Small Finance Bank & Its History:
How many small finance banks in India?
According to wikipedia, out of 10, there is 8 small finance bank are functioning in India.
Original licensee/promoter | Commenced | Bank name | Headquarters |
Ujjivan Financial Services Pvt Ltd | 1 February 2017 | Ujjivan Small Finance Bank | Bangalore |
Janalakshmi Financial Services Pvt Ltd | 29 March 2018 | Jana Small Finance Bank | Bangalore |
Equitas Holdings Pvt Ltd | 5 September 2016 | Equitas Small Finance Bank | Chennai |
Au Financiers India Ltd | 19 April 2017 | AU Small Finance Bank | Jaipur |
Capital Local Area Bank Ltd | 24 April 2016 | Capital Small Finance Bank | Jalandhar |
Disha Microfin Pvt Ltd | 21 July 2017 | Fincare Small Finance Bank | Bangalore |
ESAF Microfinance | 17 March 2017 | ESAF Small Finance Bank | Reg: Chennai, Corp: Thrissur |
RGVN North East Microfinance Ltd | 17 October 2017 | North East Small Finance Bank | Guwahati |
Suryoday Microfinance Pvt Ltd | 23 January 2017 | Suryoday Small Finance Bank | Navi Mumbai |
Utkarsh Microfinance Pvt Ltd | 23 January 2017 | Utkarsh Small Finance Bank | Varanasi |
What is the Regulation of Small Finance Bank?
- Existing non-banking financial companies (NBFC), microfinance institutions (MFI) and local area banks (LAB) can apply to become small finance banks.
- They can be promoted either by individuals, corporations, trusts or societies.
- They are established as public limited companies in the private sector under the Companies Act, 1956.
- They are governed by the provisions of Reserve Bank of India Act, 1934, Banking Regulation Act, 1949 and other relevant statutes.
- The banks will not be restricted to any region.
- They were set up with the twin objectives of providing an institutional mechanism for promoting rural and semi-urban savings and for providing credit for viable economic activities in the local areas.
- 75% of its net credits should be in priority sector lending and 50% of the loans in its portfolio must in ₹25 lakh (US$38,000) range.
- The firms must have a capital of at least ₹100 crore (US$15 million).
- The promoters should have 10 years’ experience in banking and finance. The promoters stake in the paid-up equity capital will be at least 40% initially but must be brought down to 26% in 12 years. Joint ventures are not permitted. The foreign shareholding will be allowed in these banks as per the rules for FDI in private banks in India.
- At a net worth of ₹500 crore (US$77 million), the listing will be mandatory within three years. Small finance banks having a net worth of below ₹500 crore (US$77 million) could also get their shares listed voluntarily.