INDIVIDUAL

ASSIGNMENT
SMALL FINANCE BANKS

Submitted By: Pranav Kaushal-16PGDMBFS37 |

Contents
Introduction ............................................................................................................................................ 3
Literature review..................................................................................................................................... 3
Objective of the study ............................................................................................................................. 4
Differentiated Banks ............................................................................................................................... 4
Key features of Small Finance Banks ...................................................................................................... 4
Incorporation ...................................................................................................................................... 4
Financial Parameters........................................................................................................................... 5
Scope of Activities ................................................................................................................................... 6
Corporate Governance........................................................................................................................ 6
Area of operation ................................................................................................................................ 6
Prudential Norms ................................................................................................................................ 6
Entities approved for Small Finance Banks ............................................................................................. 7
MFI Finances ........................................................................................................................................... 8
Small Finance Banks and Contribution to Financial Inclusion ................................................................ 9
Challenges before Small Finance Banks .................................................................................................. 9
Latest on Small Finance Banks .............................................................................................................. 11
Conclusion ............................................................................................................................................. 12
Introduction
On 16th September, 2015, Reserve Bank of India (RBI) announced in principle approval to ten
entities for setting up yet another category of differentiated banks, named as Small Finance Banks
(RBI Press Release 1). This was a sequel to earlier announcement by RBI on 19th August, 2015
granting in principle approval for setting up “Payment Banks” to eleven entities. The primary
objective of setting up of small finance banks is to further financial inclusion by (a) provision of
savings vehicles, and (ii) supply of credit to small business units; small and marginal farmers; micro
and small industries; and other unorganised sector entities, through high technology-low cost
operations (RBI, Guidelines 2014). Small Finance Banks are in addition to two universal banks earlier
licensed by RBI, viz. IDFC Bank and Bandhan Bank.

Differentiated banks are distinct from universal banks as they function in a niche segment. The
differentiation could be on account of capital requirement, scope of activities or area of operations
(Gandhi, 2015). A Differentiated Licensing Procedure for banks is an accepted practice
internationally. It is interesting to note that earlier also RBI did an experiment in 1996 with small
banks by announcing setting up of Local Area Banks (LABs). These banks were conceived as low cost
structures, to provide efficient and competitive financial intermediation services in a limited area of
operation, i.e., primarily in rural and semi-urban areas, generally in three contiguous districts.
Presently, only four LABs are functioning.

The introduction of new category of niche banks followed the announcement made by the Finance
Minister in the first budget of new Government in July 2014 that “RBI will create a framework for
licensing small banks and other differentiated banks. Differentiated banks serving niche interests,
local area banks, payment banks etc. are contemplated to meet credit and remittance needs of small
businesses, unorganized sector, low income households, farmers and migrant work force”.
Accordingly, keeping in view that small finance banks can play an important role in the supply of
credit to micro and small enterprises, agriculture and banking services in unbanked and under-
banked regions in the country, RBI has decided to license new “small finance banks” in the private
sector.

Literature review
A Committee on Financial Sector Reforms, headed by Dr. Raghuram G. Rajan, Governor, RBI, in 2009
had examined the relevance of small banks in the Indian context. The Committee had opined that
there was sufficient change in the environment to warrant experimentation with licensing of small
banks. It recommended allowing more entry to private wellgoverned deposit-taking small finance
banks (SFBs) offsetting their higher risk from being geographically focused by requiring higher
capital, a strict prohibition on related party transactions, and lower allowable concentration norms
(Rajan, 2009). Further, Nachiket Mor Committee, on Comprehensive Financial Services for Small
Businesses and Low-Income Households, suggested two broad designs for differentiated banks in
India - the Horizontally Differentiated Banking System (HDBS) and the Vertically Differentiated
Banking System (VDBS) based on the functional building blocks of payments, deposits and credit
(More et al., 2014). This initiated setting up of differentiated banks in the country.

The differentiated banks offer many advantages like providing niche banking through differentiated
licensing, risk rationalization of specialized entities operating in specialized areas (Gandhi, 2015). A
good reason for establishment of such banks was suggested as - with Differentiated Banking
Licenses, we will have banks that do not face boom and bust at the same time. Reduced correlations
between banks will give lower systemic risk. The presence of such banks will make the system less
monolithic and hence better placed to face economic cycles (Kainth, 2014). But with the
introduction of differentiated bank licenses, newer dimensions of banking would emerge and
whether this initiative would be able to fulfill the broader objective of financial inclusion or is the
idea of a differentiated bank a little premature is a matter of discussion (Jain, 2014).

Objective of the study

The concept of differentiated banks, more so of Small Finance Banks is new in India. Reserve Bank of
India (RBI), after lot of deliberations at various fora, has taken lead in establishment of these banks
and announced regulatory guidelines for such banks and also issued in principle approval to
specified entities. The objective of this study is to explore the concept of Small Finance Banks as
initiated in India as a category of differentiated banks and its regulatory framework along with
financial and other credentials of entities granted approval for this purpose.

Differentiated Banks
Differentiated banks are different from universal banks which serve financial needs – payment,
deposit and credit- of all sectors. Differentiated banks provide niche banking services in select
verticals. However, in a country like India, there is huge deficit of financial inclusion and this has
created need for establishing differentiated banks catering to needs of specially demarcated sectors
in unbanked areas and small businesses. In countries like USA, Australia, Singapore, Hong Kong,
Brazil, and Indonesia, differentiated banks system has prevailed for long time and these banks are
issued licenses for carrying out specific activities. Some other “niche and specialised institutions are
the South Korean Post Office Bank (only payments and deposits), GE Capital (credit and payments),
MasterCard and Visa (only payments)” (Gandhi, 2015).

The differentiated licensing policy is followed in countries like Malaysia and Brazil even though
financial inclusion agenda is not important thrust area there. In India, some initiative was taken in
differentiated category of banks in the form of Regional Rural Banks (RRB) and Local Area Banks
(LAB) aimed at serving the vital needs of financial inclusion but it did not achieve desired results and
massive area of financial exclusion in India remains unsatiated. This created a dire need to provide
accelerated impetus for aggressive financial inclusion and starting banking institutions focused on
such niche segments. The result has been in principle licensing of Small Finance Banks by RBI. The
salient characteristics of these banks in India, as announced by RBI, have been delineated below

Key features of Small Finance Banks

These banks will be required to use the word “Small Finance Banks” in their name to differentiate
them from other banks. Some of important features of small finance banks are as under:

Incorporation
These banks are registered as a public limited company under the Companies Act, 2013 and are
given scheduled bank status under provisions of the Reserve Bank of India Act, 1934. Resident
individuals/professionals with 10 years of experience in banking and finance and Companies and
Societies owned and controlled by residents were made eligible as promoters to set up small finance
banks. Existing NonBanking Finance Companies (NBFCs), Micro Finance Institutions (MFIs) and Local
Area Banks (LABs) owned and controlled by residents were also allowed to opt for conversion into
small finance banks after complying with all legal and regulatory requirements. However, joint
ventures by different promoter groups for the purpose of setting up small finance banks were not
permitted. As local focus and the ability to serve smaller customers was the key criteria in licensing
such banks, local players or players focused on lending to unserved/underserved sections of the
society were considered more appropriate for such banks.

Financial Parameters
The small finance banks have minimum paid-up equity capital of Rs. 100 crore. In view of the
inherent risk of such banks, they will have to maintain a minimum capital adequacy ratio of 15 % of
risk weighted assets (RWA) on a continuous basis, subject to any higher percentage as may be
prescribed by RBI from time to time. The banks' Tier I capital will have to be at least 7.5 per cent of
RWAs and Tier II capital will be limited to a maximum of 100 per cent of total Tier I capital. The
minimum initial contribution of promoters has been stipulated at 40% of the paid-up equity capital
of banks which will be locked in for a period of five years.

The promoter's stake has also to be brought down to 30 % in a period of 10 years and to 26 % in 12
years. Listing for these banks shall be mandatory within three years after they achieved net worth of
Rs.500 crore. Further, as per Banking Regulations Act, 1949, no shareholder can have voting rights in
excess of 10% and the same applies to small banks as well. Any acquisition of 5% or more of paid up
share capital in a private sector bank will be allowed with the prior approval of RBI. However, it is
noticed that International Finance Corporation, the private investment arm of World Bank has taken
exposure of $114 million (approx Rs. 950 crore) in six of the ten MFIs given licenses of small finance
banks (Narasimhan, 2015). The MFIs include Equitas, Ujjivan, Suryoday, Utkarsh, AU Financiers,
Janakshmi who got investment through debt and equity during 2010-12.

IFC's shareholding in these institutions is in the range of 15-20%. Combined with other foreign
investors including social investment funds and multilateral institutions, total foreign holding of
these MFIs may be around 70-90% and as per RBI guidelines, they will have to draw a plan for
diluting it to 40% in a time frame of 18 months (Vishwanathan, 2015). The foreign shareholding in
small finance banks can be up to 74% as per existing guidelines for private sector banks with 49%
under automatic route and balance under approval route.

Scope of Activities
Small Finance Banks have been allowed to carry on following activities:

• acceptance of deposits and lending to unserved and underserved sections including small
business units, small and marginal farmers, micro and small industries and unorganised
sector entities
• other non-risk sharing simple financial services activities, not requiring any commitment of
own fund, such as distribution of mutual fund units, insurance products, pension products,
etc. with the prior approval of the RBI
• become a Category II authorized dealer in foreign exchange business for its clients'
requirements
• set up subsidiaries to undertake nonbanking financial services activities.

The other financial and non-financial services activities of the promoters, if any, will be kept
distinctly ring-fenced and not commingled with the banking business. The operation of these banks
will be required to be technology driven from the beginning conforming to generally accepted
standards and norms. The annual branch expansion plans of the small finance banks for the initial
five years would need prior approval of RBI. They will be required to meet the requirement of
opening at least 25 per cent of its branches in unbanked rural centers (population upto 9,999 as per
the latest census).

Corporate Governance
The board of these banks should have majority of independent directors. Further, these banks must
have a high powered Customer Grievance cell to handle customer complaints and its operations will
come under the purview of RBI's Ombudsman Scheme.

Area of operation
There will not be any restriction in the area of operations of small finance banks. RBI has, however,
given priority to those applicants who in the initial phase set up the bank in a cluster of under-
banked States/ districts, such as in the North-East, East and Central regions of the country. These
banks are expected to primarily be responsive to local needs.

Prudential Norms
These new banks have to put in place a robust risk management framework. They will be subject to
all prudential norms and regulations of RBI as applicable to existing commercial banks including
requirement of maintenance of Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR). No
forbearance would be provided for complying with the statutory provisions. The small finance bank
will be required to extend 75% of Credit to the sectors eligible for classification as priority sector
lending (PSL) by RBI as against 40% for commercial banks. While 40% of its credit will have to be
allocated to different sub-sectors under PSL, balance 35% will be for any one or more sub-sectors
under the PSL where it has competitive advantage.
The maximum loan size and investment limit exposure to a single and group would be restricted to
10% and 15% of its capital funds, respectively. Further, in order to ensure that the bank extends
loans primarily to small borrowers, at least 50% of its loan portfolio should constitute loans and
advances of up to Rs. 25 lakh. The banks are also precluded from making any exposure to their
promoters, major share holders (shareholding more than 10%) and relatives of promoters and the
entities in which they have significant control.

Entities approved for Small Finance Banks

72 applications were received by RBI for setting up small finance banks (RBI Press Release 2). On
16th September, 2015, RBI granted in principle approval to following ten entities to start Small
Finance Banks (RBI Press Release 1): Au Financiers (India) Ltd., Jaipur Capital Local Area Bank Ltd.,
Jalandhar Disha Microfin Private Ltd., Ahmedabad Equitas Holdings P Limited, Chennai ESAF
Microfinance and Investments Private Ltd., Chennai Janalakshmi Financial Services Private Limited,
Bengaluru RGVN (North East) Microfinance Limited, Guwahati Suryoday Micro Finance Private Ltd.,
Navi Mumbai Ujjivan Financial Services Private Ltd., Bengaluru Utkarsh Micro Finance Private Ltd.,
Varanasi The “in-principle” approval granted is valid for 18 months to enable the applicants to
comply with the requirements under the Guidelines and fulfill other conditions stipulated by the RBI
where after RBI would consider granting them a license for commencement of banking business. An
important factor considered in selection of above entities was their proposed reach into unbanked
areas and underserved sections of the population.

The final selections have been made after extensive deliberations at various high powered
committees. The selected players have their headquarters based across different regions of the
country. There is one institution each from Ahmedabad, Jallandhar, Chennai, Thrissur, Varansi,
Guwahati, and two each from Mumbai, and Bengaluru. Eight out of ten successful candidates are
already working as micro financing institutions (MFIs) and have been under supervision of RBI as
Non Banking Finance Companies (NBFCs). RBI decision to grant approval to MFIs to float small banks
is a bold step in the sense that in 2010, MFIs had seen a crisis particularly in Andhra Pradesh and
they have since then shown performance with their viable business model to win the confidence of
RBI. Many of them have been successful in extending credit to last mile poor villagers where banks
were not able to reach or were not successful in their operations. Another successful MFI has
already transformed in to a full-fledged universal bank and started operations recently as Bandhan
Bank after getting license from RBI.
MFI Finances
The successful business model followed by most MFIs attracted large investors, both domestic and
international, to take equity stake in their capital. The International Finance Corporation, (IFC)
Washington, belonging to the World Bank group, has itself invested in many of Indian MFIs showing
confidence in their activities and business operations. This includes MFIs who have found favour by
RBI in the grant of initial license for establishing Small Finance Banks.

IFC (Washington)'s investment in six of ten entities is to the tune of $114 million (around Rs 950
crore), made through debt and equity (Narasimhan, 2015). These MFIs are also known to have
professional management. The performance of eight MFIs who have been given in principle approval
has been quite encouraging as shown in Table 1. All the above MFIs have more than 100 branches,
one has more than 300 and one even in excess of 400 signifying their reach to a significant
population of rural population. The MFIs already being in lending space, the average number of
borrowers is at the level of 11 lacs, not small by any means and three MFIs have borrowers more
than 20 lacs each. The MFIs can leverage this client base to their business advantage. The loan
portfolio that is outstanding represents good performance by all MFIs from which they can take their
operations as bank to much higher levels. These MFIs definitely can have confidence level to
transform them to successful small banks in near future.
Small Finance Banks and Contribution to Financial Inclusion
The financial inclusion objective of Government of India remains largely unmet despite slew of
measures taken in the form of Bank Nationalisation and extension of their rural network, Regional
Rural Banks, Correspondent Banks and Self Help Groups (SHGs) etc. The rural poverty in vast areas
remains a bane of independent India. People who are at the bottom of pyramid need not only bank
account but also small credit facilities to start something for earning their livelihood on continuous
basis. Despite all the efforts of various entities, to promote financial inclusion, a large section of poor
population remains deprived of normal banking and payment facilities (Kishore, 2015). The
institutional mechanism has failed to address this desperate need satisfactorily. Many MFIs have
ventured in this area by giving small loans to needy and surprisingly the credit record reported by
these MFIs inspires a lot of confidence and may well have prompted to scale up their operations by
conversion to small banks under the new scheme of RBI.

MFIs business model has been rooted in the very areas in which they operate. They possess good
knowledge of local population and their needs and conditions. Their operatives are also drawn from
local masses and they economized their establishment costs through this. The MFIs selected for
establishing new category of banks have shown sound financial position through their unique local
rooted business model. Currently, MFIs have been raising resources from banks and other
borrowings. Some of them have also garnered finances by raising capital from domestic and
international investors and venture funds. The cost of deposits to be attracted from local people will
obviously be cheaper but it will be depend on their capability to create a niche in this area. They will
also be competing with another niche segment announced by RBI a month ago in the form of
Payment banks, who will face tougher challenge as being not able to be competitive in deposit rates
as their deployment of funds is largely earmarked for Government securities with limited yield.

Challenges before Small Finance Banks

• Limited Scope of Using Cost Effective Measures Such as Internet and Phone Banking: The
commercial banks target higher use of internet and phone banking by their clients to reduce
the costs of branch-based services. In case of MFIs/NBFCs, their current target clientele does
 not yet have capacity and infrastructure to use such channels. Thus, SFBs will have to rely on
traditional brick-andmortar branches to service their customers. While SFBs may use
innovative channels such as mobile money or card-based point-ofsales devices, the
infrastructure set up, channel management, and investment in financial education will all
pose challenges.
• Control Dilution: The regulation requires SFBs to ensure that a single shareholder holds a
40% stake in the organisation, and this must be reduced to 26% in 12 years. It will be a
challenge for many MFIs as promoters of almost all large MFIs/NBFCs have a minority stake
in the organisation. One of the leading investor groups with capacities to invest for the long
term may have to don the mantle of promoter and nurture the institution. Such long term
patient capital is not easy to obtain.
• Capped Foreign Ownership: The guidelines put a cap of 74% foreign ownership in SFBs.
Currently, many MFIs/NBFCs have more than 75% foreign equity due to investments from
foreign sources. Bringing the figure to below 74% will be a challenge for these institutions
considering the dearth of domestic equity sources.
• Added Capital Pressure: The guidelines require SFBs to ensure a capital adequacy ratio
(CAR) of 15%, cash reserve ratio (CRR) of 4%, and statutory liquidity ratio (SLR) of 22%. These
will be a significant burden to manage, resulting in reduced earnings until SFBs develop a
substantial depositor base.
• Issues in Human Resource Management: MFI/NBFC employees are specialised in micro
lending operations with limited exposure to sell and service push products such as liabilities,
insurance or pension. Also, the credit teams are not well versed with banking credit
assessment tools and mechanisms. This means that SFBs will have to source, hire and train
talent from the banking industry. This may lead to increased compensation expectations of
new incumbents and also market competition to hire the best in industry.
• Change Management: MFIs/NBFCs have to undergo massive organisational changes and will
require comprehensive and efficient change management processes. The key organisational
changes will be: a) Currently MFI/NBFCs have a single channel for customer acquisition for
different products. However, as these MFI/NBFCs transform to SFBs, they will require
different sales channels for liabilities and credit acquisition, and to focus on cross sales
between these channels. Another challenge will be to establish robust operations and credit
teams. b) The majority of the employees in MFIs/NBFCs are experienced in dealing with a
mono product and group lending structure. Thus, for transformation MFIs/NBFCs would
have to hire employees with banking experience. This would mean a cadre of new
employees joining the team and affecting the existing organisational culture. This would
require a change management so that old cadre does not feel threatened by the new
additions to team and the new team adjusts to the ‘culture

Some of these challenges can be deal breakers as many MFIs/NBFCs that are not in position to fulfil
all these requirements. Also, some eligible MFIs/NBFCs will not want to transform to SFBs for sound
strategic reasons. The reasons for such a choice include: scope for strategic tie-ups with commercial
and payment banks; fear of mission drift; lack of capacity to manage banking business; and/or a
desire to “wait and watch” hoping to apply for an SFB license at a later date. Other reasons could be
stringent regulatory and compliance norms; strong presence in a limited geography; and lack of
willingness to change organisational form.
Latest on Small Finance Banks

Ujjivan Small Finance Bank Ltd, the fifth such bank in India and the largest among the five in terms of
their small loan portfolio, will make its formal debut on Monday after running a pilot programme in
five of its microfinance branches in Bengaluru. Professor Muhammad Yunus, a microfinance pioneer
and founder of the Grameen Bank in Bangladesh, will inaugurate the bank. Like Equitas Small
Finance Bank Ltd, which started operations in September, Ujjivan too listed its shares ahead of the
bank’s launch to comply with the regulatory norms. Foreign stake in such banks is capped at 49% but
most of the entities that have got a licence from the central bank to float small finance banks have
higher foreign stakes. One of the ways of restructuring the shareholding pattern is to sell some of
the foreign stake in the market to domestic investors. Jaipur-based AU Financiers (India) Ltd, which
has got the final licence from the Reserve Bank of India (RBI) to start a small finance bank, too plans
to enter the capital market soon.

AU Financiers is one of the two entities which were not into microfinance business among the 10
granted in-principle approval to float such banks by the Reserve Bank of India (RBI) in September
2015. The other is Capital Local Area Bank, the first to take off in April 2016. Since it was into banking
activities—albeit in a limited way in five districts of Punjab before becoming a small finance bank—
Capital Small Finance Bank Ltd has built expertise for both giving loans as well as raising deposits.
This is why it is not offering high interest rates to garner deposits. Its savings bank rate is 4%, on a
par with most banks in India.

However, this is not the case with microfinance institutions (MFIs) turning into small finance banks.
For instance, Equitas, which has cricketer Ravichandran Ashwin as its brand ambassador, is offering
6% interest on savings bank deposits of up to Rs1 lakh; for higher amount, interest rates
progressively go up to as much as 7.5%. For fixed deposits, its highest interest rate is 8.85%.

Two other small finance banks took off in January—Utkarsh Small Finance Bank Ltd and Suryoday
small Finance Bank Ltd. Like Equitas and Ujjivan, both were into microfinance business. Utkarsh has
1.2 million borrowers and Suryoday 750,000. Utkarsh is offering 8.25% to 8.4% interest on fixed
deposits and 6% on savings bank while Suryoday is offering between 6.25% and 7.25% on savings
account, depending on the amount of money kept, and as much as 9% on fixed deposits between
one and two years. Clearly, garnering deposits is the biggest challenge before them as they were into
giving loans and not collecting deposits. They are offering more than high street banks to woo
depositors and they can afford to do so as the cost of borrowing from other banks is even more.
They want to replace their high-cost bank borrowings (raised to build their micro-loan portfolio) with
deposits as fast as they can. Once that is achieved they will bring down the rate in sync with the
requirement to build their loan book. Since higher interest rate alone cannot ensure deposit
mobilization, they plan to combine that with superior service. While interest rates will attract
depositors, service will create the sticky factor.

Ujjivan, founded by ex-Citibanker Samit Ghosh, however, doesn’t want to pay high rates on savings
bank account even as it is willing to offer about 1 percentage point more than larger banks for fixed
deposits. It plans to make savings an attractive proposition for its own borrowers—some 3.5 million
of them, served by 470 branches—by not having any minimum balance requirement, offering debit
card, etc. Many of its borrowers have bank accounts but when it comes to savings, they use the
informal sector (chit funds). Ujjivan wants to woo them back to the banking fold, besides reaching
out to small traders and other not-so-privileged people.

It will be interesting to watch how the strategy of higher interest rate and superior service plays out
for the small finance banks as trust is the critical factor when it comes to garnering deposits. It is
built over time and the “small finance” moniker may not be of great help for doing so. Also, MFI
employees know how to give money and collect loan repayments but not deposits. If the same set of
people is used for deposit raising, they may end up compromising on the credit discipline as they
need to invest time in picking up the new skill. The other option is to appoint bankers for deposit
mobilization. That leads to the second challenge for the small finance banks—human resource
management. They would need to pay relatively more to attract banking talent and this may create
resentment among the existing MFI employees who have been with the organization for years.

Yet another challenge will be technology which calls for hefty investment and great understanding.
The ideal technology platform should benefit both the customers (ease of transactions) and the bank
(reduction in cost) but it’s not easy to achieve this as there aren’t too many bankers who understand
the nuances of technology well and there are tech experts who don’t mind taking the bankers for a
ride. People and technology will be the two biggest risk factors for these banks.

All small finance banks will attempt in their own ways to redefine banking in India—a nation where
urban centres are overbanked but in rural pockets bank credit is still a scarce commodity. In the
process, all may not thrive. A few will eventually upgrade themselves into universal banks while a
few others may not even survive—they will be taken over by other banks for their franchise. The
good news is that the fear of failure has not inhibited either these banks or the banking regulator.

Conclusion
The introduction of Small Finance Banks is a giant leap towards financial inclusion to meet the much
cherished objectives of the Government. Despite many concerns and challenges, these new
differentiated banks along with earlier announced Payment Banks, present a good strategy to
deepen the financial inclusion agenda. However, looking at the size of the country, ten numbers of
such banks may not be adequate and need to be expanded substantially if financial inclusion has to
get real and substantial push on a nationwide scale.

RBI has announced its intention to allow more such banks in future after watching experience of
first lot. These banks can surely add to financial literacy of rural masses and can target segments that
are not already serviced by existing banks in effective dispensation of banking products and services
at grass root levels. By innovative use of technology, these entities can provide ease and
convenience to customers in so far excluded areas and thereby convert the challenges faced by
them into opportunities. Even though they may face competition from existing universal banks, they
can pose challenges to them by chipping away their rural deposits and making inroads into their
priority sector obligations. Most of these MFIs have shown large reach and can shake up their micro
finance business to exploit the excellent opportunity sprung up in new format. The selected band of
MFIs now appears to be ready for transformation into Small Finance Banks to harness the potential
opportunity given to them.

Much will, however, depend on their business plans, products range and their competence to
transform and manage the banking business with efficiency and in a profitable manner and in
combating many other challenges. In Indian scenario, looking at past experiences, any financial
inclusion agenda can deliver results only if it is dispensed through a financially viable business
venture.