Difference between Commercial Bank and Small Finance Bank | AU Small Finance Bank
Gateway to Digital Life. Download AU 0101.

Difference Between Commercial Bank and Small Finance Bank

    The banking sector forms an integral part of India’s economic growth. These financial institutions are licensed to provide loans, receive deposits, and other solutions to individuals & businesses. In India, there are several types of banks - Commercial Banks, Small Finance Banks, Payments Banks, and Cooperative banks. Commercial Banks are further fragmented into Public Sector, Private Sector, Foreign and Regional Rural Banks (RRB). In this article, let’s explore how Commercial Banks are different in comparison to Small Finance Banks.

     

    What is Commercial Bank?

    Commercial Banks deal with activities such as granting loans, accepting deposits, and providing financial assistance to public, corporates and the government. These banks are regulated under the Banking Regulation Act, 1949.

     

    What is Small Finance Bank?

    A Small Finance Bank is a segment under the banking system, and every bank under this segment is regulated by the Reserve Bank of India (RBI). The banks are set up to promote the objective of financial inclusion by offering basic banking facilities to the un-served and underserved sections. These sections comprise of small business owners, small and marginal farmers, unorganised entities, and micro, small and medium enterprises (MSMEs).

    Read More about What is Small Finance Bank

    For instance, AU Bank is one of the Small Finance Banks in India, regulated by the RBI. We started our journey as a non-deposit NBFC in the year 1996 in Jaipur. Today, we are India’s leading retail bank. We offer a gamut of asset and liability products, including Savings Accounts, Current Accounts, Fixed Deposits, Recurring Deposits, ATMs, Locker Services, etc. In addition, we also offer loans such as MSME Loans, Vehicle Loans, and many others.

     

    Difference Between - Commercial Bank & Small Finance Bank

    Particulars
    Commercial Bank
    Small Finance Bank
    Regulatory Requirement
    Regulated by the RBI
    Regulated by the RBI
    Loan
    Offers all types of loans
    Provides basic loan facilities such as personal loans, gold loans, MSME loans, vehicle loans, etc.
    Target Customers
    Not restricted to any one or any entity
    Small borrowers, unorganised workers, MSMEs
    Remittance Services
    Can provide remittance services
    Can provide remittance services
    Online Banking Solutions
    Can offer digital banking solutions
    Can offer digital banking solutions
    Capital Limit
    Requires enormous amounts of capital
    Minimum capital should be up to 100 crores
     

    About AU Small Finance Bank

    AU Bank is one of the Small Finance Banks operating in India. Founded in 1996, we started operating as a private financing company, then known as AU Financiers, that aimed at supporting the funding requirements of the low & middle-income individuals.

    In 2015, we became one of the entities, along with 9 others, to acquire the license to operate a Small Finance Bank in India due to our strong foothold and proven track record. Today, we are recognised as one of the best Scheduled Commercial Banks in India. We are also listed as a Fortune India 500 company for providing a convenient banking experience to all our customers.

     

    AU Bank Key USPs

    • With a legacy of 27 years, we have an extensive network consisting of 940+ banking touchpoints.
    • We have become a ‘trusted companion’ for 20 lakhs+ customers.
    • We aim at addressing the financing needs of the low and middle-income earners. Most of our customers are either self-employed or small business owners; these include automobile dealers, kirana shop owners, drivers,  brick making units, hardware & electrical shops, educational institutes, and furniture shops among others.
    • We are also actively building a strong foothold in the digital space through our user-friendly digital banking services such as AU 0101 App, AU 0101 NetBanking, Video Banking, and WhatsApp Banking solutions. This helps make banking products and services more accessible to new and existing customers.
    • We also offer Loans through Assessed Income Solution for customers with No CIBIL history/Income Proof.
     
    Banking is essential in today's world. From the above, it is clear that all types of banks serve a purpose and are integral for the customers they serve.

Blogs & Articles