Capital Small Finance Bank Limited is a small finance bank based in India, with its headquarters in Jalandhar, Punjab. It is notable as the first institution in the country to be granted a small finance bank licence by the Reserve Bank of India (RBI), commencing operations under that status in 2016 after converting from a local area bank.
Key facts
| Type | Small Finance Bank |
|---|---|
| Industry | Banking, Financial services |
| Headquarters | Jalandhar, Punjab, India |
| Country of operation | India |
| Predecessor | Capital Local Area Bank |
| Regulator | Reserve Bank of India |
Background
The institution originally functioned as Capital Local Area Bank, one of the few local area banks established in India following the policy framework introduced by the Reserve Bank of India in the 1990s to encourage rural and semi-urban banking. Its operations were initially concentrated in parts of Punjab.
In 2015, the RBI granted in-principle approvals to ten applicants for setting up small finance banks, a new category of differentiated banks aimed at furthering financial inclusion by providing savings vehicles and credit to underserved sections such as small business units, small and marginal farmers, micro and small industries, and unorganised sector entities. Capital Local Area Bank was among the entities granted this approval, and it was the first to begin operating as a small finance bank.
History
- 2016: Capital Local Area Bank transitioned into Capital Small Finance Bank, becoming the first small finance bank to commence operations in India.
- The bank expanded its branch network across northern India, with a focus on Punjab, Haryana, Delhi, Rajasthan and Himachal Pradesh.
- The bank subsequently undertook an initial public offering and listed its equity shares on Indian stock exchanges.
Operations
Capital Small Finance Bank offers a range of retail banking products and services, including savings and current accounts, fixed and recurring deposits, agricultural loans, mortgage and housing finance, loans to micro, small and medium enterprises (MSMEs), and other retail credit products. In line with the small finance bank framework, a significant share of its lending is directed towards priority sector segments.
Significance
As the first small finance bank to launch in India, Capital Small Finance Bank holds a notable place in the evolution of differentiated banking in the country. The small finance bank category was designed to deepen financial inclusion, and Capital's transition from a local area bank illustrated the regulatory pathway available to existing niche banking institutions seeking a wider operational mandate.
Related topics
- Small Finance Bank
- Reserve Bank of India
- Local Area Bank
- Banking in India
- Financial inclusion in India
- Jalandhar
References
- Reserve Bank of India — guidelines and notifications on small finance banks.
- Wikidata: Q76383664