Small Finance Banks in India

What is a Small Finance Bank?

A Small Finance Bank (SFB) is a type of bank in India that focuses on providing financial services to people who may not have easy access to regular banks. All small finance banks in India are set up to help small businesses, farmers, low-income households, and others in rural and urban areas. They offer services like savings accounts, fixed deposits, loans, and more, but on a smaller scale compared to big banks.

The main goal of top Small Finance Banks in India is to promote financial inclusion, which means giving everyone an opportunity to save money, borrow loans, and use other banking services. They help small traders, entrepreneurs, and individuals needing small loans to grow their businesses or meet their financial needs.

Top 5 small finance Bank in India

Here are some of the best Small Finance Banks in India that are known for their services and customer-friendly approach:

AU Small Finance Bank

It is recognised as India’s top small finance bank offering a wide range of services, including savings accounts, fixed deposits, and loans. They are known for their extensive network and easy digital banking options.

Ujjivan Small Finance Bank

Popular for providing easy access to banking services, especially for low-income households and small businesses. Ujjivan SFB has a strong focus on financial inclusion and has branches across the country.

Equitas Small Finance Bank

Known for offering affordable loans and a variety of savings schemes. They focus on micro and small enterprises, as well as individuals who need smaller loans. Their digital banking platform is also user-friendly.

Jana Small Finance Bank

Previously known as a microfinance institution, Jana SFB offers savings accounts, fixed deposits, and personal loans. They aim to empower small entrepreneurs and communities with easy access to finance.

Fincare Small Finance Bank

Known for its customer-centric approach, Fincare SFB provides convenient banking solutions, including competitive interest rates on savings and deposits. They also offer personalized loan options for small businesses and individuals.

These banks stand out because they are committed to making banking services simple and accessible for everyone, especially those who need smaller financial assistance or live in areas where big banks may not be present.

Also read – Best Bank to Open Savings Account Online

How many small finance banks are there in India?

As of now, there are 12 Top Small Finance Bank in India. These banks were established to promote financial inclusion by providing essential banking services to underserved sections of society, including small businesses, farmers, and low-income groups. Following is the Small Finance Bank list in India:

AU Small Finance Bank
Ujjivan Small Finance Bank
Equitas Small Finance Bank
Jana Small Finance Bank
Fincare Small Finance Bank
Utkarsh Small Finance Bank
Suryoday Small Finance Bank
Capital Small Finance Bank
ESAF Small Finance Bank
North East Small Finance Bank
Shivalik Small Finance Bank
Unity Small Finance Bank

This list of small finance bank in India has been licensed by the Reserve Bank of India (RBI) and plays a key role in providing easy access to banking services, especially in rural and semi-urban areas.

Which is the First Small Finance Bank in India

Capital Small Finance Bank was the first Small Finance Bank to start in India. It began operations on April 24, 2016, after getting approval from the Reserve Bank of India (RBI).

Before becoming a Small Finance Bank, it was known as Capital Local Area Bank, which had been providing banking services since 2000. Once it became a Small Finance Bank, it expanded its offerings to include more services, like savings accounts, fixed deposits, and different types of loans.

Capital Small Finance Bank set an example for other banks by showing how banking can reach smaller towns and villages. It made banking easier and more accessible for people who might not have had access to regular banks, helping them save money, take loans, and manage their finances better.

Which small finance bank is best in India

AU Small Finance Bank is the biggest Small Finance Bank in India. It started as a company that gave loans for buying vehicles, and in 2017, it became a Small Finance Bank with approval from the Reserve Bank of India (RBI).

AU Small Finance Bank has grown quickly and now has many branches across the country. They offer a range of banking services, like savings accounts, fixed deposits, and different types of loans. They also have easy-to-use digital banking options. What makes them stand out is their focus on serving people in both cities and villages, especially small businesses, shop owners, and individuals who need simple and convenient banking.

Because of their wide reach and the variety of services they provide, AU Small Finance Bank is the largest Small Finance Bank in India, helping millions of customers manage their finances.

Are Small Finance Banks Safe?

Yes, SFBs are generally safe for most retail customers. They are fully regulated by the Reserve Bank of India (RBI), which means they must follow strict rules on lending, capital adequacy, and operations just like commercial banks. Additionally, all deposits in SFBs are insured up to ₹5 lakh per depositor under the Deposit Insurance and Credit Guarantee Corporation (DICGC). This provides a solid safety net even if a bank fails.

SFBs also offer higher interest rates on fixed deposits and savings accounts, making them attractive for small savers. However, they are relatively new and some operate in high-risk lending segments. So, while the risk is controlled, it is slightly higher than that of large, established banks.

To stay safe, it’s advisable to keep your deposits within the ₹5 lakh insurance limit and choose SFBs with strong financial backgrounds and good credit ratings.

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