Meaning
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- These banks cater to a specific class of customers (known as niche banking)
- They bring out specialised products.
- They offer limited range of activities which is unlike universal banks.
- These banks were created based on the recommendation of Nachiket Mor Committee in 2013.
Two Categories: 1. Small Finance Banks 2: Payments Banks
1. Small Finance Banks
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- They specifically cater to small business units, MSMES, unorganised sectors, Small and Marginal Farmers.
- Aim: to provide financial inclusion to sections of the economy not being served by other banks.
- They can accept deposits and can issue credit (loan).
- They can issue debit as well as credit cards.
2. Payments Banks
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- They cannot issue loan.
- They can accept deposits upto Rs 2 Lakh per customer.
- Aim: Payment/ Remittance and formalisation of savings culture through deposits.
- They can issue debit cards but cannot issue credit cards.
- The license of these banks is mainly taken up by the fintech companies and telecom service providers.
