Savings Account Interest Rates of Small Finance Banks

Latest Savings Account Interest Rates of Small Finance Banks (Jan 2022)

Introduction

Here are the latest Savings Account Interest Rates of Small Finance Banks in India. These interest rates are as on last updated by the bank’s respective websites.

Savings Account Interest Rates of Small Finance Banks (Jan 2022)

What is a Small Finance Bank?

• Small Finance Banks (SFBs) is a specific segment of banking created by RBI under the guidance of the Government of India.
• Objectives of setting up Small Finance Banks is furthering financial inclusion by primarily basic banking activities to unserved and under-served sectors. It includes
• In short, Small Finance Banks are set up for these unserved and underserved segment with a basic objective of:
• Provision of savings vehicles primarily to unserved and underserved sections of the population in India
• Supply of credit to Small Business Units, Small and Marginal Farmers, Micro and Small Industries, and Unorganized entities, through high technology-low cost operations

How Small Finance Banks Were Created?

• Small Finance Banks were created pursuant to the announcement in Union Budget 2014-2015, presented on July 10, 2014. 
• RBI issued the Guidelines on 27 November 2014 for licensing and regulation of SFBs. On 16 September 2015, RBI decided to grant “in-principle” approval to 10 applicants to set up small finance banks under the Guidelines issued on November 27, 2014.
• SFBs are subject to all prudential norms and regulations of RBI as applicable to existing commercial banks like maintenance of Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR).
• The target group of SFBs is similar to that of Local Area Banks. They are required to extend 75% 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% of its loan portfolio should constitute loans and advances of up to Rs. 25 lakh.
• Here, Categories given by RBI under PSL for SFBs are as follows :
  1. Agriculture
  2. Micro, Small and Medium Enterprises (MSMEs)
  3. Export Credit
  4. Education
  5. Housing
  6. Social Infrastructure
  7. Renewable Energy

Summary

• In the current declining interest rate cycle amid COVID-19, many small finance banks offer competitive interest rates on Savings accounts.
• Utkarsh Small Finance Bank, and North East Small Finance Bank offer the highest savings account interest rates (5%) for the balance up to Rs.1 Lac
• Equitas Small Finance Bank and Fincare Small Finance Bank & Ujjivan Small Finance Banks also offer higher and competitive interest rates (up to 7.0%) on their savings account for balance above Rs.1 Lac
• AU Small Finance Bank and Ujjivan Small Finance Banks are the only two listed Small Finance bank players in India (listed on Stock Exchange NSE and BSE). Equitas Small Finance Bank is also the go-to list on the exchanges soon (its IPO had been floated in the recent week).