Small Finance Banks: Due to the ups and downs in the banking sector in the last few years, common people are becoming more concerned about their money. In such a situation, when a small finance bank offers more interest than public sector banks (PSUs), it is difficult to believe. Some small finance banks are currently offering 7 to 8 percent interest, while in public sector banks this rate is not more than 5.5 percent.
In such a situation, the question arises in the mind of every person that should an account be opened in these small finance banks? Will their money be safe in such banks?
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What amount will be safe?
In small finance banks, up to five lakh rupees like government banks are completely safe. Up to Rs 5 lakh in Small Finance Bank is insured under the Deposit Insurance Credit Guarantee Corporation (DIGGC) Deposit Insurance Program. It also insures savings, current account, recurring deposits and fixed deposit deposits. In this, not only the principal amount, but also the interest is insured. Small finance banks are under the direct supervision of the Reserve Bank of India (RBI) and, like PSUs and other private banks, are classified as scheduled banks.
More money should not be kept in a bank:
Any investment in small finance banks is as safe as PSUs or private sector banks. If you are making a fixed deposit, do not invest all your capital in a single bank. In such a situation, it would be safer for you to invest in different small finance banks. In such a situation, it would be safe to deposit a maximum of Rs 5 lakh in any small finance bank.
50% loan portfolio of small finance banks should be in the category up to Rs 25 lakh. In this way, large banks are prohibited from giving loans, due to which the chances of fraud are less. The Reserve Bank of India (RBI) closely monitors these banks, so opening or investing an account in these banks is considered to be largely safe.
PSUs or large private banks have huge cash, so they are not keen on getting high deposits. Small finance banks offer higher interest to get more deposits. If one has to invest in small finance bank in view of high interest, then it would be prudent to invest a maximum of Rs 5 lakh in a bank.