EMERGENCE OF SMALL AND FINANCE BANK : AN ANALYSIS ON INDIAN MARKET CONTEXT

Abstract

The Government of India announced to establish the Small Finance Banks (SFBs) for the purpose to expand financial services and providing basic banking activities to the underprivileged population. Basically, Small Finance banks allows micro and small enterprises, small and marginal farmers, micro and small industries to avail lending services. Financial inclusion helps in reducing poverty and empowers women, marginalized and secluded population to make sound financial decisions. . It also aims to strengthen the Indian economy by connecting small businesses with formal financial institutions. Small finance banks like conventional banking also involves accepting deposits and lending activities. In recent years, the Indian banking sector has witnessed the emergence of a new categories of banks, known as Small Finance Banks(SFBs). These banks were introduced by the Reserve Bank of India(RBI) in 2015 with an objective of promoting financial inclusion and providing banking services to the underserved section of the society.