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  • Category: Miscellaneous

    Will the small finance banks make a big difference?

    The Reserve Bank of India has recently granted license to many small finance banks, to function as regular banks. They have already started operations and the likes of Fincare have the most advanced Information Technology to attract all sorts of customers. Its net banking services is too good.

    Can such banks make a big difference? Am told they lend to a huge number of self help groups and so on. Should this continue to be their focus or should be get into the big banking services as well?Am told there are no clear directions in this regard.

    What is your opinion on this?
  • #640293
    The best way to get an idea is to try on you. If I ask you to open an account in one of those banks then would you prefer to open it at once or would you like to wait & watch till some movements are seen with other customers coming up with their feedbacks. There are other factors as well like the safety of your funds & the other benefits including the annual returns on your deposits.

    The competition is huge & the options are already there for the customers like us with the big name in the market. These banks have come up with an Image of being more reliable with more advance system to be implemented with. And so what I feel is that in case of capturing more market shares the different banks will introduce different attractive schemes so as to maintain the existing customer & at the same time adding more to the list.

    So in conclusion the competition would even be far fierce in comparison to what we are witnessing now & the new entrepreneurs would have do their best in order to survive the current market situation but the marketing strategy could do wonders & anyone could be the gainer in the long term.

  • #640296
    These are all new banks. How will be their credit rating? That is to be observed. Before we take a decision we should get some idea about these banks. The big names like HDFC. ICICI and IDBI are attracting customers and many of the customers are having a lot of confidence in these banks. Immediately nobody will run to these new banks. They have to prove themselves and the customers should get the confidence that their money is safe. Then only people will keep their money in these banks. Of course, people may go for loans if they are offering at a lower rate of interest.
    The existing banks will always try to retain their customers and hence they may also become very competitive. That way it is good for the customer the expenses in the bank may come down. Personally, I don't go immediately to the new banks till their credentials are proved.

    always confident

  • #640355
    I was attracted by the ad of one of the early started small finance banks in our place. They offered a higher rate of interest on deposits. It was about two or three percent more than what my bank was giving me. But then I had a doubt,how they will sustain by paying such high interest. For that thy have to keep their loan interest still higher.

    So, t have a first hand feel, I opened an account with that bank and kept a deposit. For some days I was one of their VIP customer. That time they had not started lending. But my inner feeling is that such banks may not be able to sustain for more unless they get subsidy or some other aid from government. Or, they had to reduce the deposit interest or hike their loan interest.

    But as their lending is restricted to small borrowers , they may not have high NPAs. Once their capital is adequate they may be able to turn over it with profit. Who knows what is in store? They may be even taken over by multinationals, if the government and people are not vigilant and have tight statutes.

  • #640363
    What I feel that small or micro financing companies are given the nod of doing the banking business just to cater to the business class or the trade class communities who need short term finance for their capital investments and they would pay the installments on daily collection basis. In fact in the past there was a bank called Prudential Co-operative bank at Hyderabad which was catering to the trade class and was really doing well. But the board of directors started giving loans for housing and mortgage and that brought defame to the bank as many customers as turned as defaulters as the managed to get loans on even litigation properties which could not be even sold on auctions and thus the bank has to be closed. So now also if the mircro banks functions for small amount as loan and take care of collection, nothing wrong.
    K Mohan
    'Idhuvum Kadandhu Pogum "
    Even this challenging situation would ease

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