About SFBs

• Small Finance Banks (SFBs) primarily undertake 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. 
• These banks basically work as savings vehicles as well, as they are engaged in offering credit facilities through their advanced technology & low-cost operations.
• They are eligible to provide credit card and debit card facilities and associational services. 

Regulations

• SFBs 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). 
• SFBs are required to open at least 25% of its branches in unbanked rural centres.
• SFBs 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.

Why in News?

• Unity Small Finance Bank has announced its entry into Tamil Nadu with six branches.