Small Banks Key features of the Small Finance Bank

Small Banks

Key features of the Small Finance Bank

1) The small finance bank shall primarily undertake basic banking activities of acceptance of deposits and lending to unserved and underserved sections including small business units, small and marginal farmers, micro and small industries and unorganised sector entities.

2) There will not be any restriction in the area of operations of small finance banks.

3) The minimum paid-up equity capital for small finance banks shall be Rs. 100 crore. The promoter's minimum initial contribution to the paid-up equity capital of such small finance bank shall at least be 40 per cent and gradually brought down to 26 per cent within 12 years from the date of commencement of business of the bank.

4) The small finance banks will be required to extend 75 per cent of its Adjusted Net Bank Credit (ANBC) to the sectors eligible for classification as priority sector lending (PSL) by the Reserve Bank.

5) At least 50 per cent of its loan portfolio should constitute loans and advances of upto Rs. 25 lakh.

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