Exploring India Best Small Finance Banks for Savings & Loans

The banking sector in India has evolved a lot in the past few years, and one of the reasons for its frequent growth is the rise of Small Finance Banks (SFBs). These banks were initially started to help people residing in rural areas, small towns, and low-income groups get better access to financial services like accounts, savings, fixed deposits and loans. 

In this post, we will understand the best small finance banks in India, and how they are helping people in saving people and borrowing easily and why they are being recognised among both customers and investors. 

What are Small Finance Banks?

Small Finance Banks are a type of bank approved by the Reserve Bank of India (RBI). They work on the motive to bring banking services to the people whom large banks often leave out. 

These include - 

• Small business owners
• Farmers
• Workers in the informal sector
• People in remote or rural areas

These banks provide a wide range of services like:

• Savings and fixed deposit accounts
• Home and vehicle loans
• Business and personal loans
• Microfinance and agricultural loans

In 2025, India will have 11 small finance banks, and most of them are doing well in terms of growth and customer satisfaction. 

Why Choose Small Finance Banks?

Small finance banks are normally small in size compared to big public or private sector banks; however, they come with multiple advantages - 

• Better Interest Rates: Several SFBs offer higher interest rates on savings accounts and fixed deposits.
• Easy Loan Access: People with limited documents or no credit history can still be eligible to apply for loans.
• Focus on Customer Service: These banks often offer more personalised support.
• Digital Services: Most small finance banks now provide internet banking, mobile apps, and digital wallets.

Best Small Finance Banks in India for Savings & Loans 

Here is the list of some of the most trusted and top-performing small finance banks in India, based on market performance, customer service and financial stability. 

1. AU Small Finance Bank

• Headquarters: Jaipur, Rajasthan
• Network: 2400+ branches across 21 states and 4 union territories
• Famous for: Wide loan range, high savings rates, and strong digital banking

Why AU Bank is a Good Choice:

Au Bank is one of the most prominent small finance banks in India. It offers home loans, business loans, vehicle loans and personal loan banking services. Also, it gives competitive interest rates on savings accounts and fixed deposits. In FY25, it reported a strong 32% hike in profit and frequent but steady growth. 

Ideal for: Salaried individuals, small business owners, and people looking for digital banking options.

2. Ujjivan Small Finance Bank

• Headquarters: Bangalore, Karnataka
• Network: 750+ branches across 26 states and UTs
• Popular For: Loans for housing, vehicles, MSMEs, and agriculture

Why Ujjivan is Reliable:

In the current time, Ujjivan has been helping over 9 million customers with affordable banking solutions. The bank focuses on rural and semi-urban customers. In FY25, it posted a profit of ₹726 crore, showing stable financial performance. Also, it offers gold loans, crop loans and Kisan loans. 

Ideal for: Farmers, rural families, and small-scale entrepreneurs.

3. Jana Small Finance Bank

• Headquarters: Bangalore, Karnataka
• Network: 770+ branches in 22 states and 2 UTs
• Popular For: Personal and business loans, agent banking, mobile banking

Why Jana Bank Stands Out:

Jana Bank concentrates on bringing financial services to underserved areas. It offers savings accounts, fixed deposits and various types of loans. In 2025, its stock rose over 29% showing investor confidence. It has adopted digital banking and agent banking networks to reach remote locations. 

Ideal for: Rural customers, digital-savvy users, and borrowers with low documentation.

4. Suryoday Small Finance Bank

• Headquarters: Navi Mumbai, Maharashtra
• Network: 700+ branches across 15 states
• Popular For: Microfinance, affordable housing loans, and a customer-first approach

What Makes Suryoday Unique:

Suryoday Bank has been helping 3.3 million+ customers, especially in the low-income segment. It offers a variety of loan It offers a diverse range of loan products, including home, vehicle and business loans. The bank is working on expanding its digital services to provide better convenience. 

Ideal for: Low-income groups, micro-business owners, and first-time savers.

Services Offered by Small Finance Banks

Here’s a brief overview of the common services offered by SFBs:

Service:- Description

Savings Accounts :- Easy to open with attractive interest rates, often higher than traditional banks.

Fixed Deposits (FDs) :- Higher FD rates compared to big banks, flexible tenures, and safe returns.

Loans :- Includes personal loans, business loans, home loans, vehicle loans, and agricultural loans.

Microfinance:- Special loan schemes for women, self-help groups (SHGs), and small vendors.

Digital Banking:- Mobile apps, internet banking, and ATM services are available.

Key Advantages of Using Small Finance Banks

Here are the benefits of using small finance banks - 

• High-Interest Rates on Savings and FDs

There are several finance banks that offer 6% to 7.5% interest on savings accounts and up to 8.5% on fixed deposits, which is higher than many banks. 

• Quick Loan Approvals

With simple paperwork and less strict credit checks, SFBs can approve and disburse loans faster than traditional banks. 

• Strong Rural Focus

These banks offer more on helping people in tier-2, tier-3 cities and villages, making banking more inclusive. 

• Personalized Service

With smaller branches and dedicated teams, customers tend to get more attention and help in person. 

Things to Consider Before Choosing an SFB

Mentioned below are the things to keep in mind before opting for an SFB - 

• Regulatory Oversight:

SFBs are run by the RBI; therefore, your money is safe. However, you always need to double-check the license and credibility of the bank. 

• Digital Experience:

Some of the SFBs have limited internet and mobile banking. If Online banking is important for you, choose a bank with the best digital platform. 

• Branch Availability:

Ensure that the bank has a branch or ATM near your home or office for easy access. 

• Loan Terms & Charges:

Compare loan interest rates, processing fees, and repayment terms before applying.  

• The Future of Small Finance Banks in India

As India frequently focuses on financial inclusion, small finance banks will play an even bigger role. They are expected to grow faster than traditional banks, especially in rural and semi-urban regions. 

As per the reports, the sector is likely to grow by 20-23 % in FY26, showing robust potential for both customers and investors. 

Conclusion

Small finance banks are changing the way India saves and borrows money. By keeping focus on accessibility, higher returns and customer-friendly services, they are a great option for people seeking better savings accounts and seamless loan options. 

Whether you want to open a high-interest savings account, start a fixed deposit or get a loan for personal or business needs, exploring India’s top small finance banks can be a smart step ahead. 

If you are planning to save or borrow money smartly, this is the correct time to explore small finance banks and take advantage of their customer-friendly services.