Conditions of SFB's Pre and Post Covid-19 and future ahead

1. IMPACT OF COVID-19 ON SFBs AND
FUTURE AHEAD

2. MENTOR- Dr(CMA) Nandita Mishra
Pranav Bharti
Ayushman Singh
Ashmita Gupta

3. Small finance banks are a type of
niche banks in India. Banks with a
small finance bank license can
provide basic banking service of
acceptance of deposits and
lending. The aim behind these to
provide financial inclusion to
sections of the economy not being
served by other banks, such as small
business units, small and marginal
farmers, micro and small industries
and unorganised sector entities
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SMALL FINANCE BANKS

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5. WHY TO FOCUS
ON SFBs AND
MSMEs ?
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7. PRE-COVID SCENARIO
» RBI announced certain guidelines for the issuance of ‘on tap’
licences to small finance banks in August 2019. This is aimed at
promoting banking facilities for small borrowers and encourage
competition.
» To take forward ‘Make in India’ campaign of the Government of
India, SIDBI has today entered into an MoU with two SFBs viz. AU
Small Finance Bank and Suryoday Small Finance Bank, to make
available timely and adequate credit at affordable rates to MSE
units and to augment credit flow to MSE sector.
» During FY2019, total deposits in SFBs jumped 130% leading to an
increase in the share of deposits to 59.6% of non-equity liabilities
in FY2019 compared with 37.6% in FY2018.
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https://www.moneylife.in/article/small-finance-bank-deposits-jump-130-percentage-in-
fy2019-but-cost-remains-high-report/58892.html

8. IMPACTS OF COVID-19
❏ Small financial banks Lose customers
❏ RBI has granted temporary relief to
borrowers in the form of a three-month term
loan moratorium
❏ Huge amount of NPA cases
❏ Banks stopped working capital loans to
business
❏ Share prices of lenders to the bottom
❏ Deposits are already in a precarious position
❏ No physical disbursements possible
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9. ADAPTATION OF COVID-19
❏ AU Bank launched COVID Shield Deposit for Emergencies helps to manage monthly
expenses – EMIs, Rent, School Fees & Living expenses at times like these
❏ Going digital with latest technology to reach customers for those in urgent need of
fund and provide services.
❏ ESAF ties up with fintech firms a platform for new digital banking solutions.
❏ Increasing workforce now for doorstep banking service to increase customer
interactions
❏ Diversification and tie ups for loans
❏ Equitas SFB IPO opens for subscription at discount.
❏ AU Shopping Dhamaka' offer launch - Overall, point-of-sale (PoS) and e-commerce
transactions witnessed a surge of 16 per cent
❏ SFB’s are following emotional banking and are becoming more customer-centric.
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11. FUTURE OF
BANKING
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AI BLOCKCHAINFINTECH
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➔ Improve predictions and Manage risks
➔ Control Money laundering
➔ Credit decision making
➔ Default rate reduced
➔ Market trends
➔ Personalized banking for customers
➔ Cybersecurity
AI IN BANKING

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FINTECH
Cost
Effective
Reduced TAT
Online Payments Niche
Product/Service
E-Wallets

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FINTECH GROWTH
CURVE

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17. ⮚ Faster Payments
⮚ Clearance and settlement system
⮚ Fundraising
⮚ Credit and Loans
⮚ P2P Transfer
⮚ Digital Identity verification
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BLOCKCHAIN IN BANKING
WILL BLOCKCHAIN LEAD TO
DISRUPTION OF BANKING
SYSTEM?

18. SUGGESTIONS
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❏ Micro-skilling, upskilling and re-skilling of employees
❏ Collaborative approach
❏ New risk management methods - AI
❏ Customer-centric approach
❏ Linking Ration shops and unorganized sector - Using APP
SFBs will require Rs 5,000-6,000 crore equity infusion for
15-20% CAGR by 2023: ICRA

19. REFERENCES
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⮚ https://en.wikipedia.org/wiki/Small_finance_bank
⮚ https://timesofindia.indiatimes.com/blogs/agyeya/covid-19-affect-on-micro-small-and-
medium-enterprises-msmes/
⮚ https://www2.deloitte.com/content/dam/Deloitte/in/Documents/finance/in-fa-digital-
innovations-for-retail-and-sme-banking-noexp.pdf
⮚ www.m-cril.com
⮚ Bfsi.economictimes.indiatimes.com

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