Small Banks

Small finance banks: 

They aim to provide basic banking services to small farmers and micro industries.

With an objective to promote financial inclusion, these banks will focus on small borrowers, low-ticket savings and serve rural areas.

They provide basic banking services like accepting deposits and lending to the unbanked sections such as small farmers, micro business enterprises, micro and small industries and unorganised sector entities.

As per RBI norms, a Small Finance Bank will primarily undertake basic banking activities of acceptance of deposits and lending to unserved and under-served sections, including small business units, small and marginal farmers, micro and small industries and unorganized sector entities.

Such entities can operate across the country as there is no area of restriction. However, at least 50% of its loan portfolio should constitute loans and advances of up to Rs 25 lakh.

These banks will be subject to all prudential norms and regulations of RBI as applicable to existing commercial banks, including requirement of maintenance of Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR).

These banks would not enjoy any forbearance from complying with the statutory provisions.

They have to follow the norms for scheduled commercial banks.

As far as foreign shareholding is concerned, this would be as per the Foreign Direct Investment (FDI) policy for private sector banks as amended from time to time.

As per the norms, the operations of the bank should be fully networked and technology driven from the beginning, conforming to generally