SMALL FINANCE BANKS IN INDIA: A PRELIMINARY STUDY OF THEIR PROGRESS

Abstract

Financial inclusion has been the focus of the policies of the Reserve Bank cof India since 2005-06. Along with various initiatives of the Government of India, the RBI approved the setting up of Small Finance Banks (SFB) in the year 2015. SFBs are niche banks set up to undertake basic banking activities for the unserved and underserved sections of the population. This paper traces the progress of SFBs in India in terms of the number of branches, regional spread and volume of business. It was found that since their establishment, over the period of five years, there has been considerable expansion of SFB branches with a wider regional spread and substantial increase in their volume of business. Towards the end of the study period it was also found that more SFB branches were set up in semi-urban and rural areas. The preliminary examination of SFBs suggests that they are progressing in the right direction as envisaged in the objectives behind setting them up.