Generally we scurry to open our bank accounts in Big finance banks like HDFC, State Bank Of India,etc as we have this notion inculcated in our heads that they are more trustworthy than the other small finance banks like AU Small Finance Bank, Jana Small Finance Bank,etc. The major reason behind our thinking this way is the advertising through which these banks have reached human kind ever since the concept of banks was established. We believe in the brand and due to its vast availability in almost all cities, we have the assurance that these banks will keep our money safe and meet all the other expectations we have from them. Hence, we avoid or neglect small finance banks simply because they are not famous. Although opening an account in a small finance bank can have some benefits and advantages which can be jotted down as:-
High Interest Rates on Deposits and Personalized Customer Service
To start with, these small finance banks offer very high interest rates on deposits in comparison to big finance banks. These banks also offer personalized customer service to their customers according to their exact needs. In other words, they customize each and every customer’s needs just like the big financial banks but without any hefty cost.
Loan can be comfortably accessed and enhanced focus is given on financial inclusion
Small Finance Banks are designed to provide microloans, small business loans, and agricultural loans with flexible repayment terms, making credit more accessible.
“The Reserve Bank of India (RBI) has expanded the scope of UPI by allowing Small Finance Banks (SFBs) to offer pre-approved credit lines. This move aims to reduce costs and improve access to credit, particularly for ‘new-to-credit’ customers. SFBs’ high-tech, low-cost model is expected to enhance financial inclusion by reaching underserved customers with small-ticket loans through the UPI platform.” – This article explains how the small finance banks can reach more people, especially those who have been underserved by traditional banks by using UPI platform.This includes individuals who may need small loans for personal or business needs. Also, customers can now get loans that are already approved without needing to apply for them each time which makes borrowing quicker and simpler.
Small Finance Banks provide services to customers at their doorstep
Small Finance Banks provide doorstep banking services, particularly in rural and semi-urban areas. They deploy banking correspondents or agents to provide essential banking services, such as account opening, deposits, withdrawals, and loan disbursements, at the customer’s doorstep. This is another factor that benefits its customers.
Small Finance Banks are now digitally advanced and provide competitive Banking Services
Many Small Finance Banks offer modern digital banking services, including mobile banking, internet banking and UPI transactions, ensuring convenience of the user.
Small finance banks offer full-fledged banking services like current accounts, debit cards, insurance, and investment options so they are pretty equivalent to the big finance banks. Hence breaking the stereotype that people shouldn’t invest and they cannot trust small finance banks.
Small Finance Banks provides lower minimum balance requirements and safety
Small finance banks allow people to open accounts with lower minimum amounts which makes it very much accessible by people with limited financial resources.
These banks are regulated by the Reserve Bank of India (RBI) and hence security is of utmost priority. Hence, people should not scurry away thinking that their money will not be safe in these small finance banks.
Downside of Small Financial Banks
Just like how every good thing has certain cons, so does Small Finance Banks. To discuss some of its disadvantages, the first point that needs to be mentioned is the limited branch that it has which is a huge problem. People will have no access to these banks if they move to different cities. On top of it, there are certain small finance banks that may have higher fees for services like minimum balance non-maintenance, fund transfers, and withdrawals compared to larger banks which is another drawback for its users. Keeping factors like these in mind, people don’t trust these banks at all and hence, don’t even consider opening an account in the same. Also, Small Finance Banks focus mainly on small businesses and individuals, meaning they may not be ideal for large enterprises or those seeking high-value loans. Hence, in other words, small finance banks are not suitable for everyone.
Conclusion
With pros and cons, small finance banks are not very much different or so to say very less equipped to big finance banks. They are developing rapidly and hence can acquire a better position very soon next to the big banks in the upcoming days. These factors are one of the major reasons why you should exactly consider opening your account in small finance banks
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