Microfinance and Self-Help Groups in India
Small Finance Banks
Several big microfinance lenders converted to small finance banks, which can take deposits and offer a wider range of services.
Some MFIs graduated into banks.
What they are
Small finance banks serve small businesses and low-income customers, and can accept deposits.
Examples
Ujjivan, Equitas, AU and Jana are among them.
Benefits
Deposits give a cheaper, more stable source of funds than borrowing.
Regulation
They must lend a large share to priority sectors and meet capital rules.
From MFI to bank
A microfinance company obtains a licence and starts offering savings accounts.
Thinking small finance banks lend only small sums
Some serve various segments.
Key takeaways
- Small finance banks can take deposits.
- Several MFIs converted.
- Deposits lower funding costs.
- They face priority-sector rules.
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