QUESTION 28. What do you mean by Small finance bank ?
ANSWER 28. SMALL FINANCE BANK : Small finance banks are of type of niche banks in India banks with a small finance bank license can provide basic banking service of acceptance of deposits and lending. The aim behind these to provide financial inclusion to section of the economy not being served by other banks, such as small business units, small and marginal farmers, micro and small Industries and unorganized sector entities.
They were set up with the twin objectives of providing an institutional mechanism for promoting rural and semi urban savings for providing credit for economic activities in the local areas.
They were established as public limited company in the private sector. They were promoted either by individual , corporate trust or societies. The minimum paid up capital of such bank are 5 crore. The promoters contribution should be atleast 2 crore. Local areas banks can operate and open their branches in a maximum of of three geographical contiguous districts. They are governed by the provision of RESERVE BANK OF INDIA ACT 1934 , BANKING REGULATIONS ACT 1949 AND OTHER RELEVANT STATUTES.