Small Finance Banks: They are set up on the recommendations of Usha Thorat Committee


There are two kinds of Banking Licence given by RBI – a) Universal Licence & B) Differentiate Banks (niche banks).
SFB & Payments Banks are examples of differentiated banks. Differentiated banks cater to the needs of a certain demographic segment of the population.


The objectives of setting up of small finance banks will be to further financial inclusion by (1) accepting deposits (2) supply of credit to small business units; small and marginal farmers; micro and small industries; and other unorganised sector entities, through high technology-low cost operations.

Criteria for setting up SFBs

  • Registration: The small bank shall be registered as a public limited company under the Companies Act, 2013.
  • Eligibility: Individuals/professions with 10 years of experience in finance, Non-Banking Financial Companies (NBFCs), microfinance companies, local area banks are eligible to set up SFBs.
  • Capital requirement: The minimum paid-up capital shall be Rs. 100 crore to set up small banks.


  • Every SFB should have “small finance bank” in its name.
  • They can’t set up subsidiaries to undertake non – banking financial activities.
  • 25% of its branches must be set up in un banked areas.

Loans & Advances

  • Maximum loan size to a single person cannot exceed 10% of total capital funds; cannot exceed 15% in the case of a group.
  • 75% of its Adjusted Net Bank Credit (ANBC)should be advanced to the priority sector as categorized by RBI.
  • At least 50% of its loans should constitute loans and advances of up to 25 lakh.

List of Small Finance Approved by RBI

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