SFBs seek bigger loans, co-lending rights to help more borrowers
Small Finance Banks (SFBs) are asking the Reserve Bank of India to let them give out bigger loans—raising the cap from ₹25 lakh to ₹50 lakh.
They also want a shot at co-lending with other banks, something they're currently left out of.
SFBs say these changes would help them support more people and businesses as their own growth has been strong lately.
SFBs' growth has been strong in recent years
Between 2022 and 2025, SFBs recorded a 28% compound annual growth rate (CAGR) in deposits and a 25% CAGR in advances—way ahead of most banks.
While they used to focus more on microfinance, that share has dropped from 35% to 24%, with more loans now going to MSMEs, vehicles, housing, financial institutions group, and corporates.
Still, rules force SFBs to keep half their loans under ₹25 lakh, which limits how much they can help bigger borrowers.
SFBs hope higher loan limits and co-lending could finally give them room to grow.