DCB New 2

Analysing the Dual Effects :
Small Finance Banks, Payment Banks,

and Fintech’s on Economy, Customers,
and Employment Opportunities
By
VARAD HINGOLIKAR
Applicant Code : 20230378
Vamnicom Pune
Contents of this Presentation
Slide Number 3 to 5 What are SFBs , Payment Banks & Fintechs ?
Slide Number 6 to 8 Impact on Economy, Customers & Employment .
Slide Number 9 Conclusion

1 Small Finance banks
Small Finance Banks focus on providing banking services to

the unbanked and underbanked segments. They play a
crucial role in fostering financial inclusion and driving
economic growth in rural and semi-urban areas.
Examples : Ujjivan Small Finance Bank.
Janalakshmi Small Finance Bank.
Equitas Small Finance Bank.
A U Small Finance Bank
Services offered :
• Saving / current account
• Fixed / Recurring Deposits
• Loans
2 Payment Banks
A payments bank is like any other bank, but operating on a

smaller scale without involving any credit risk. In simple
words, it can carry out most banking operations but can't
advance loans or issue credit cards
Examples : Airtel Payments Bank
India Post Payments Bank
Jio Payments Bank
Paytm Payments Bank
Services offered :
• Saving / current account
• Mobile banking services
*Can work as a agent for offering Time
deposits as in case of paytm working as agent of
indusland bank
3 Fintechs
Financial technology (FinTech) is an industry that uses

technology to offer financial services.
Fintech NBFCs are a sector of non-banking financial
companies that use new financial technology to conduct
financial services
Examples : Paytm , Razorpay , pinelabs , Bharatpay
Services offered :
Online Transactions
Investment Options
Payment of Bills
Impact oImpact on Economy Economy
Positive Negative
Greater access to financial services by financial • Intense competition may lead to lower profit margins
inclusion of society for already established banks
Ex : As a result of digital payment options and uptake, India has If we consider SFBs their share in banking credit and banking
taken just six years to reach its financial inclusion target of 80% - deposit is increasing at very slow pace.
41 years earlier than originally anticipated • Potential risk of overlapping services
Faster and more inclusive transactions in economy, Two banks in the same region might establish branches in close
Ex : As the no of Households in India is increasing consistently proximity, or target same customer segments, potentially staining
resources.
from 319mn in 2021 to expected 376mn
Higher Credit inflow in Economy
Ex : CASA Deposits for SFBs is estimated to have reached ₹ 640 billion
as at March 31, 2023 . It will increase the lending power of these
institutions.
Impact on Customers
Volume of Digital Payments Proportion of Branches/ Physical presence
Positive Negative
• Convenience through Digital Banking • Data Security and Privacy Concerns

• Ex : According to IMF Volume of Digital transaction has been • Financial frauds accounted for over 75 per cent of cyber
increasing at 50% CAGR over last 5 years. crimes in the country from January 2020 till June 2023, with
• Diversified range of financial products nearly 50 per cent cases related to UPI and internet banking.
• Access to Credit to underserved customers • Limited Physical presence
• Out of total credit agencies physical presence of Payment
• Ex : There has been opening of more than 450 million banks, SFB is lowest with RRB having highest at 76 %
accounts of which 56 % belongs to women and 67% of which
are in rural and semi urban areas.
• Overemphasis on Short term Financing
• Ex : Affecting credit scores, trapping the customers in cycle
of borrowing and repaying , Expensive
Impact on on Employment
Positive Negative
• As SFB & Payment Banks expand their • Consolidation and Mergers

services to underserved areas, there is need • Ex : when a Firm loses its long term profit margins to reduce
for local staff ,Field Officers and Professionals its cost of operations they go for mergers as recently expected
in Compliance and Regulatory Roles merger of AU SFB and Fincare Shift in Skill Requirement
• Technology and innovation Jobs
• Job Displacement due to automation
• Ex : According to Business today report Jobs in banks and
finance has been increased by 5.1% & 11.6 % respectively.
Ex : Jobs like loan interviewers and clerks, Loan officers
financial managers etc are at risk.
• Jobs in Ancillary Industries like Digital
Security, Cloud Computing, Digital Marketing
etc.
Conclusion :
• The future of Small Finance Banks, Payment Banks, and Fintechs in India appears promising, driven by
ongoing technological advancements and evolving consumer preferences.
• These entities are likely to continue playing a crucial role in fostering financial inclusion, expanding
digital transactions, and providing innovative financial services.
• However, regulatory oversight will be critical to manage challenges such as data security, competition,
and potential job displacement due to automation .
As at March 31, 2022, rural areas, which accounted for 47% of GDP, received just 8% of
the overall banking credit, which shows the vast market opportunity for banks and NBFCs
to lend in these areas.
—References
crisil Industry report on small finance banks
Times of India
Press Information Beauro
Hindustan Times
Business Line
THANK YOU

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Analysing the Dual Effects :

Small Finance Banks, Payment Banks,

Slide Number 3 to 5 What are SFBs , Payment Banks & Fintechs ?

Slide Number 6 to 8 Impact on Economy, Customers & Employment .

Slide Number 9 Conclusion

Small Finance Banks focus on providing banking services to

A payments bank is like any other bank, but operating on a

Financial technology (FinTech) is an industry that uses

• Convenience through Digital Banking • Data Security and Privacy Concerns

• As SFB & Payment Banks expand their • Consolidation and Mergers

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