Jalandhar-based Capital Local Area Bank (CLAB) is set to become India’s first small area finance bank by starting its operation from today that is on 13 April 2016.
RBI gave its nod to CLAB and nine other microfinance institutions on 27 November 2014.
Loan sizes of about Rs 25 lakh each should constitute at least 50 percent of the bank’s portfolio.
While the government’s objective is financial inclusion, there is a nagging fear that small banks can turn into Ponzi schemes unless monitored closely by the regulator RBI.