Small Finance Banks: Balancing Financial Inclusion and Viability

Richa Saraf and Pallavi Chavan of RBI in Jan-2021 Monthly Bulletin write a short paper on Small Finance banks:

Small Finance Banks are a new entrant into the Indian banking system with a differentiated focus on financial inclusion. They have witnessed a rapid growth in their branch network and asset base while maintaining a healthy asset quality and generating high return on assets. These banks have been reasonably successful in reaching out to under-served sectors, such as the Micro, Small and Medium Enterprises (MSMEs), and have an impressive coverage of borrowers with small credit needs.

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