Comparatively there are few small finance banks which are giving high interest rates when compared to other large sized commercial banks. If we compare SBI is offering around 6.50 percent interest rate whereas the give interest rate at 8.50 if you are going for a 499 days Deposit.
How small Finance Banks are safe?
- Small Finance banks are regulated by Reserve Bank of India and they very strict regulations and guidelines which makes them a place where your investments will be safe and secure.
- Big lending’s are restricted in small finance banks. 50 % percent of its loan portfolio should be in 25 Lakh category. There isn’t no chance that some big corporate company will be take a big loan and bankrupt and there will be no chance of bank having a non performing assets just by one customer.
- Small finance banks priority is always small businesses and medium enterprises. They are covered by micro finance which includes farmers and other low level businessmen.
- Small finance banks must have a capital of Rs 100 Crores. If not they must have statutory liquidity ratio requirements which makes it very easy for the customers to have access to the cash whenever they want with draw their money which makes them very handy for their customers.
- For a small finance bank to get listed on stock exchange it must have a net worth of Rs.500 crores and the chances of a small bank to reach such net worth they need a time line of 3-4 years minimally.
- Loans are insure upto a sum of 1 lakh and if any loan got defaulted it will get covered for one lakh.
The above makes the small finance banks a safe place to invest and asking a fixed deposit with such banks is ideal. The main reason being less risk and you will be getting more of the benefits such as high interest rates. So, if you are planning to go for a fixed deposit or any having any other invest idea in small finance banks you can go for it.