Small Finance Banks Can Be Transformed Into A Big Banks: RBI
Small finance banks can be transformed into big banks, SFB’s performance in the last 5 years has been excellent: RBI.
For the first time, 10 companies were given licenses of Small Finance Bank (SFB) by RBI to provide banking services to the disadvantaged, unorganized sector workers and rural residents living in remote areas.
Despite the shock of demonetization and Corona, almost all these SFBs have now turned into a strong financial body and many of these have also been listed in the stock market.
Former RBI Deputy Governor R Gandhi says that these banks are ready to play a bigger role in the country’s economy.
Small Finance Banks in the country are expected to expand rapidly due to the adoption of cutting-edge technology, cost-effectiveness, and need-based banking products.
Addressing a seminar on Small Finance Banks and their future PN Vasudevan, MD of leading SFB Equitas, says that according to a recent report.
If India is to become a five trillion-dollar economy by the year 2025-26, then our annual economic growth rate should be on an average of 17 percent.
To achieve this growth rate, banking credit also needs an average growth rate of 23 to 25 percent. Whereas right now the pace of our banking credit is almost the same.
Traditionally lending banking institutions are not able to increase the speed of credit due to various reasons.
Small finance banks: In such a situation, we believe that if India has to become a five trillion dollar economy, then SFBs have to play a big role.
Ajay Kanwal, MD, and CEO, Jana Small Finance Bank, says that the importance of SFBs should be understood from the fact that they are providing banking facilities where most of the systems were not reaching till now.
They are providing their services to the sector which is considered to be the most challenging in terms of banking services.
Also, in just five years, these banks are not only using technology on a large scale but are doing reliable work.
If seen, more than 99 percent of the loan size is less than Rs 25 lakh. There are many SFBs whose operations are mostly in rural areas.
Alok Mishra, CEO, Microfinance Institutions Network (MFIN), says that the growing trust in SFBs has resulted in the pensioners now also wanting to open accounts with them.
In such a situation, their importance for the financial system of the country is likely to increase rapidly. Both these experts believe that in the coming days, SFBs can turn into big financial institutions.
Recently it has been observed that the RBI has decided to transfer the disputed urban government bank Punjab and Maharashtra Co-operative Bank to an SFC.
PMC Bank has been assigned to the alliance of Centrum Financial Services and BharatPe which shows that the trust of the regulatory agency has also been strengthened in small finance banks.
