About Small Finance Banks

• • The small finance bank (SFB) primarily undertakes basic banking activities of acceptance of deposits and lending to unserved and underserved sections including small business units, small and marginal farmers, micro and small industries and unorganised sector entities. 
  • The objectives of setting up of small finance banks will be to further financial inclusion by 
    • provision of savings vehicles, and 
    • supply of credit to small business units; small and marginal farmers; micro and small industries; and other unorganised sector entities, through high technology-low cost operations.
  • The small finance banks are subject to all prudential norms and regulations of RBI as applicable to existing commercial banks including requirement of maintenance of Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR). 
  • The small finance banks will be required to extend 75 per cent of its Adjusted Net Bank Credit (ANBC) to the sectors eligible for classification as priority sector lending (PSL) by the Reserve Bank. 

• At least 50 per cent of its loan portfolio should constitute loans and advances of upto Rs. 25 lakh.

• They are eligible to provide credit card and debit card facilities and associational services. 

Why in News?

• The Competition Commission of India (CCI) has approved the merger of Fincare Small Finance Bank Limited (Fincare) and AU Small Finance Bank Limited (AU).
• AU is a banking company which provides personal and commercial banking services (including provision of deposits, loans and advances, debit and credit card services, institutional banking and digital banking services). 
• Fincare is a banking company and provides deposit services (such as savings account, current account, fixed deposits, recurring deposits), lending services (including retail and microfinance loans), and digital banking services. Fincare also provides certain miscellaneous services such as distribution of insurance products.

https://pib.gov.in/PressReleasePage.aspx?PRID=1999121