‘Small’ isn’t beautiful for small finance banks

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₹25 lakh. Currently, India has 10 SFBs, many of which started their journey as microfinance institutions or MFIs. “One of the suggestions was to replicate the cooperative bank strategy, where it is called just a bank, and the word ‘cooperative bank’ is mentioned below the name," said the chief executive officer (CEO) of an SFB who attended the meeting with the RBI officials.

“Customers keep asking us if you are just a microfinance lender. We feel a name change will help bring clarity in the minds of customers and raise low-cost deposits," the banker said on condition of anonymity. Cooperative banks such as Saraswat Co-operative Bank and Kerala State Co-operative Bank already identify as ‘Saraswat Bank’ and ‘Kerala Bank’ in their websites, mentioning their full names below.

Interestingly, the websites of almost all SFBs, barring Ujjivan SFB and North East SFB, have already dropped the label from their domain names. A hoarding of AU Small Finance Bank around its regional office in Mumbai’s Kurla reads simply AU Bank. AU SFB and an RBI spokesperson did not respond to emailed queries.

“SFBs are careful when it comes to rebranding themselves as just banks. But the label of small finance banks has been dropped from domain names in anticipation of a change to a universal bank in future," the CEO of an SFB said on condition of anonymity. The lenders have conveyed their request to RBI through their association, a Unity SFB spokesperson said, adding that these banks feel that the use of the word ‘small’ may limit the comfort of two important stakeholders—depositors and investors.