Small Finance Banks: The Big Institutional Move in Banking and Financial Inclusion Arena

Abstract

A vibrant banking policy should facilitate the evolution and growth of banks and micro credit institutions, which focus on low income households, agriculturalists, tiny and small scale industries and underbanked citizens aiming at self-employment and entrepreneurship. These institutions should include such specialist institutions as may be promoted by voluntary action, private enterprise or NGOs for meeting the banking needs of the poor or small players. In the contemporary policy, ‘differentiated banks’ serving niche interests, local area banks, payment banks etc. are contemplated to meet credit and remittance needs of small businesses, unorganized sector, low income households, farmers and migrant work force. Small Finance Banks, to whom licences have recently been issued by the RBI, are a step in this direction.