'Small Finance Banks', 'Payment Banks', 'Challenger Banks' and 'Bad Banks' – Will they Revolutionize the Traditional Banking of India?

Abstract

“Small Finance Banks”, “payment Banks”, “challenger Banks” and “bad banks” are new age banks suddenly proliferated into the national and international financial market. Major countries like UK, USA, Canada, and India took hold on with these ideas. The idea of a “small Finance Bank”, “payment Bank”, “challenger Bank” and “bad bank”, though babyish as of now, with a specific objective is seemingly not a bad idea and has the potential to revolutionize the concept of banking. How each of the ideas does work in practice is yet to be seen. Whether the idea behind each of the banks will really fructify and achieve the result for which it is established is a debatable question. Time only proves this. The paper with this background aims at studying the basic concepts underlying each of these ideas and its significance, how it may revolutionize and rewrite the concept of ‘traditional banking’ if the idea makes its way properly to the expectations of the proponents, the likely contradictions and risks they suffer from and the legal complexities they face etc.

Keywords: small finance banks, payment banks, challenger banks and bad banks