Hey there! Ever wondered about those banks that specifically aim to help the little guys? I’m talking about the small businesses, the local farmers, and folks in areas that big banks often overlook. Well, that’s where Small Finance Banks (SFBs) step in. 🌟
In India, the Reserve Bank took a fantastic initiative by introducing Small Finance Banks. Their main goal? To make sure that primary banking activities and loan services reach everyone, especially those who’ve been left out by the big commercial banks. So, whether it’s a small farmer in a remote village or a budding entrepreneur in a bustling city, SFBs are here to lend a hand. 🌱➡️🌳
It’s not just about loans, though. These banks offer a whole range of services, ensuring that everyone gets a fair shot at financial growth. Stick around, and we’ll dive deeper into what makes these banks so special and why they might just be the future of banking in India. 🚀
What are Small Finance Banks?
Small finance banks are a new kind of bank that was created to provide banking services to small businesses and rural areas. They are similar to traditional banks, but they focus on lending to smaller businesses and have more relaxed eligibility requirements for borrowers. Small finance banks offer a variety of services, including savings and checking accounts, loans, and credit cards.
Small Finance Bank Updates Best Small Finance Banks in India are AU Small Finance Bank, Equitas Small Finance, Ujjivan Small Finance, Ujjivan Financial Services, and Suryoday Small Finance with the CMP of Rs. 625.8, Rs. 58.70, Rs. 29.30, and Rs.112.15.
Let us see some of the top finance companies that are listed on the Indian share market.
|Sl No||Stock Name||Market Capital|
|1||AU Small Finance Bank||₹ 34,669.71 Cr.|
|2||Equitas Small Finance||₹ 5,031.71 Cr.|
|3||Ujjivan Small Finance||₹ 2,748.02 Cr.|
|4||Ujjivan Financial Services||₹ 1,899.40 Cr.|
|5||Suryoday Small Finance||₹ 856.70 Cr.|
List of small banks in India
Here are the list of small finance banks in India based on strong fundamentals, which can you can keep in your watchlist
1. AU Small Finance Bank
Based out of Jaipur, AU Small finance bank is an Indian small finance bank that was incorporated in the year 1996 by Mr Sanjay Agarwal. It was initially started as a vehicle finance company named AU Financiers and later changed to a small finance bank in 2017.
It is part of the Fortune 500 companies in India. AU Small Finance Bank has received Reserved Bank of India (RBI) approval to operate as a Scheduled Commercial Bank. This bank’s name has been included in the Second Schedule of the Reserve Bank of India Act, 1934. The Bank has a net worth of ₹7,127 Cr, a deposit base of ₹44,278 Cr, and Assets Under Management (AUM) of ₹42,023 Cr.
|Market Cap||₹ 34,669.71 Cr.|
|Profit Growth||73.49 %|
2. Equitas Small Finance
This is a very important stock that should make part of your diversified portfolio. Equitas small finance bank was founded in 2016 and was listed in October 2020. They have joined hands with companies like HDFC, Niyo, etc for various financial services.
Its holding company is Equitas Holding. Many mutual fund managers have shown interest in this share due to its strong performance in the last 2 years.
|Market Cap||₹ 3,62,180.28 Cr.|
|Profit Growth||57.70 %|
Also Read: Best Finance Stocks in India
3. Ujjivan Small Finance
Ujjivan Small finance bank is a Bangalore based Indian bank founded in 2017 by Mr Samit Ghosh. It is a leading small finance bank in India and provides services such as home loans, business, personal & vehicle loans, and Online Savings accounts.
Ujjivan Small Finance Bank is listed in the Scheduled Banks by RBI and has a stable credit rating by various credit rating agencies. It started the march 2022 quarter with a net income of Rs 127 crore but closed FY22 with a net loss of Rs 415 crore.
|Market Cap||₹ 2,748.02 Cr.|
|Profit Growth||-97.63 %|
4. Ujjivan Financial Services
Founded by Samit Ghosh in 2004, Ujjivan Financial Services is an Indian company. Ujjivan’s business model has focused on acquiring an in-depth understanding of customer needs. Ujjivan F S received its in-principle approval from RBI to set up a small finance bank in 2015 and that was when they floated their own subsidiary Ujjivan Small finance.
Its main objects are to carry on the business of making investments in group company(ies) in the form of securities, providing guarantees, etc. They also advise relating investment in bank deposits, money markets, government securities, and other services.
|Market Cap||₹ 1,899.40 Cr.|
5. Suryoday Small Finance
Suryoday Small Finance Bank is a recognized scheduled bank by the RBI. Suryoday Small Finance Bank is located in Mumbai, Maharashtra, India. It is a new-age bank that was converted from a microfinance institution having served over a million customers since 2009.
They offer a credit products suite of MFI loans, Vikas Loans, Shopkeeper Loans, etc. They are known for Retail Banking, JLG Loans, MSME Loans, Financial Services, and Loan Against Property.
|Market Cap||₹ 856.70 Cr.|
|Sales Growth||-89.31 %|
6. ESAF Small finance
ESAF Small finance bank is an Indian bank that was founded in the year 2017. It has over 500 branches around the world. It was founded by K. Paul Thomas, Mereena Paul, and Jacob Samuel and is the subsidiary of ESAF Financial Holdings Private Limited.
It offers banking services and small loans to the underbanked. It has a total asset tally of more than 9450 crores.
Advantages of Investing Small Finance Bank Stocks
There are a number of potential advantages to investing in small finance bank (SFB) stocks. Some of the potential benefits of investing in SFBs include:
- High growth potential: SFBs are relatively new banks in India, and they have a lot of potential for growth. As they expand their operations and customer base, they may be able to generate strong returns for investors.
- Focused on underserved segments: SFBs are focused on serving underserved segments of the population, such as small businesses, farmers, and low-income households. This focus on these segments may provide them with a competitive advantage and help them to grow their customer base.
- Potential for increased profitability: SFBs may be able to achieve higher profitability compared to traditional banks, due to their focus on serving underserved segments and their ability to use technology to lower costs. This could translate into higher returns for investors.
- Diversification: SFBs can be a good addition to a diversified investment portfolio, as they offer exposure to a different sector of the economy.
- Regulation: SFBs are regulated by the Reserve Bank of India (RBI), which can provide a measure of stability and security for investors.
It’s important to note that investing in SFB stocks, like any other investment, carries risks and uncertainties. It’s always a good idea to carefully research a company and its prospects before making an investment decision.
The Indian small finance banking sector is still in a nascent stage with immense scope for growth. Investing in small finance bank stocks can be quite rewarding as these banks are committed to providing continuous and efficient services to their customers. The above-mentioned list of 5 small finance bank stocks is a good starting point for anyone looking to invest in this space. Do your own research and consult with a financial advisor before making any investment decisions.
What types of services do small finance banks offer?
Small finance banks offer a range of financial services, including savings and current accounts, fixed deposits, recurring deposits, microfinance, small business loans, agricultural loans, vehicle loans, and affordable housing loans. They also provide payment services, such as ATM/debit cards, mobile banking, and online banking.
How do small finance banks differ from other banks?
Small finance banks are different from other banks in several ways. They primarily focus on serving the unbanked and underserved population, while other banks serve a broader customer base. Small finance banks also have lower minimum balance requirements and transaction fees compared to other banks. Moreover, small finance banks are required to invest a minimum of 75% of their net credit in priority sectors, such as agriculture, micro, and small enterprises, and low-income groups.
How can I open an account with a small finance bank?
Opening an account with a small finance bank is similar to opening an account with any other bank. You can visit the bank’s branch, fill out an application form, provide the necessary KYC documents, and make the initial deposit. Alternatively, you can also open an account online by visiting the bank’s website and following the instructions. Some small finance banks also offer doorstep banking services, where the bank representative visits your location to complete the account opening process.