Positive impactEconomy
Former RBI Governor calls for incentives to create more small finance banks
BusinessLine 1 hr ago·7 Sept 2026, 1:31 pm
Former RBI Governor Raghuram Rajan has suggested that the central bank should offer incentives to encourage the creation of more small finance banks (SFBs). This move aims to support financial inclusion by providing easier access to credit for underserved sectors like MSMEs and retail customers. Rajan specifically mentioned that existing entities like Equitas Bank could benefit from this policy shift.
For investors, this development signals a potential regulatory push to strengthen the niche banking sector. It highlights the government's focus on expanding credit reach beyond large corporate borrowers. While this is a positive step for financial inclusion, the broader market impact depends on the specific incentives offered and the resulting credit growth.
Investors should watch for the RBI's upcoming policy announcements to see if concrete steps are taken. The focus will be on how these incentives translate into actual new entrants and increased lending activity in the SFB space.
Excerpt from BusinessLine
India needs to do more to strengthen the small finance bank segment, which currently has only around 11 such banks nationally, C Rangarajan, Former Governor, Reserve Bank of India, said here on Monday. “I would appeal to the Reserve Bank of India to look at how to incentivise the setting up of small finance banks,” he…Read the original at BusinessLine
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