Small finance bank is a niche banking system. Initially, in 2015 RBI provide approval for implementation of this bank. Accordingly, it helps to fulfill the objectives of financial inclusion of economically weak section of the society. This section are micro and small business enterprises, local artisans, uncontrolled manufacturing sector, small and marginal farmers, daily wage earners, seasonal labors etc. Above all, with this objective small finance provides basic banking services to those people who unable to access the formal banking system. Thus, it provide services like acceptance of deposit, lending of money, insurance, pension etc. to economically vulnerable section of the society. Further, it is registered as public company under the Companies Act. 1956. <\/p>\n\n\n\n
Section 22 of the Banking regulation Act, 1949 provide license for establishment of this bank. The minimum paid-up equity capital for small finance banks shall be \u20b9<\/a>200 crore. Moreover, it shall be required to maintain a minimum capital adequacy ratio of 15 per cent of its risk weighted assets (RWA) on a continuous basis. Existing non-banking financial<\/a> companies<\/a> (NBFC), microfinance<\/a> institutions (MFI) and local area banks (LAB) can apply to become small finance banks.<\/p>\n\n\n\n