Functioning of Niche Banks in India

Functioning of Niche Banks in India

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The demands of a certain demographic group of the population are catered to and met by niche banks. The advertising, product mix, and business practices of niche banks are often tailored to the interests of a particular market or type of consumer they are aiming to attract. Banks that specialise in serving a certain segment of the population are known as niche banks. The whole business model, marketing strategy, and product mix of a niche bank are created to appeal to the tastes of the target market. Customers should confirm that the bank is insured by the Federal Deposit Insurance Corporation (FDIC) as these banks are often commercial banks.

Commercial banks that accept deposits, provide loans, and provide basic financial services like certificates of deposit (CDs), checking accounts, and savings accounts are typically the sorts of niche banks. The majority of commercial and specialist banks contrast with investment banks, which focus on bigger and more intricate financial operations. Underwriting is one of them. Others include assisting mergers and other business reorganizations, serving as a broker and/or financial advisor for institutional customers, operating as a middleman between a securities issuer and the investing public, and underwriting.

Guidelines for establishing Payment Banks - Existing Non-Bank PPI or, the Pre-paid Payment Instrument issuers, as well as other organisations such as individuals or professionals, Non-Banking Finance Companies (NBFCs), corporate Business Correspondents (BCs), mobile phone companies, supermarket chains, businesses, real sector cooperatives, owned and controlled by residents, as well as entities from the public sector, may submit applications to establish payments banks. In order to be qualified to advertise payments banks, promoters and promoter groups must be "proper and fit" with a strong professional background or have been in operation for at least five years.

• Small financing banks must have a minimum paid-up equity capital of Rs. 100 crore.

• Keeps at least 75% of its deposits in government bonds and no more than 25% in other scheduled commercial banks.

• For the first five years following the start of the payments bank's operations, the Promoter must make a minimum initial contribution of 40% to the paid-up equity capital.

• To handle complaints from customers, the bank ought to have a powerful Customer Grievances Cell.

• The Bank's operations should be completely networked and driven by technology from the beginning, adhering to generally accepted standards and guidelines.