It is mandatory for small finance banks must be registered as a public limited company under the Companies Act, 2013. Small Finance bank is considered a kind of niche banks in India. Banks that hold a small finance bank (FFB) license have a right to offer basic banking services of acceptance of securities & lending. The purpose behind these to give financial formation to sections of the economy not being accepted by other banks. Like small company units, small and marginal farmers, micro and small industries and unorganized sector entities.
It will be permitted under Section 22 of the Banking Regulation Act, 1949 and administered by the terms of the Banking Regulation Act, 1949 and Reserve Bank of India Act, 1934 and with other related Statutes and the Directives/Regulations and other Guidelines/Instructions circulated by RBI and other regulators from time to time.