Many small finance banks offer fixed deposit rates of around 8%. Is it safe to invest in Small Finance Bank Fixed Deposits? Whether our FD is guaranteed?
Let us now try to understand what are these small finance banks and how they are different from normal banks.
What are Small Finance Banks?
Small Finance Banks are a specialized type of bank established by the Reserve Bank of India (RBI) in India. The guidelines for Small Finance Banks were first introduced by the RBI in November 2014. These banks are authorized to offer fundamental banking services such as accepting deposits from the public and providing loans to individuals.
The primary objective behind the formation of such banks is to extend financial support to sectors of the economy that are often overlooked and underserved by traditional banks. These sectors may include small businesses, micro and small enterprises, small and marginal farmers, as well as unorganized sector entities. Small Finance Banks play a crucial role in…