{"id":151471,"date":"2025-06-04T12:04:22","date_gmt":"2025-06-04T06:34:22","guid":{"rendered":"https:\/\/www.practicemock.com\/blog\/?p=151471"},"modified":"2025-06-10T12:50:53","modified_gmt":"2025-06-10T07:20:53","slug":"what-is-the-difference-between-small-finance-bank-and-payment-bank","status":"publish","type":"post","link":"https:\/\/www.practicemock.com\/blog\/what-is-the-difference-between-small-finance-bank-and-payment-bank\/","title":{"rendered":"What is the difference between Small Finance Bank and Payment Bank?"},"content":{"rendered":"\n<p><\/p>\n\n\n<div class=\"yoast-breadcrumbs\"><span><span><a href=\"https:\/\/www.practicemock.com\/blog\/\">Home<\/a><\/span> \u00bb <span><a href=\"https:\/\/www.practicemock.com\/blog\/category\/banking-awareness\/\">Banking Awareness<\/a><\/span> \u00bb <span class=\"breadcrumb_last\" aria-current=\"page\">What is the difference between Small Finance Bank and Payment Bank?<\/span><\/span><\/div>\n\n\n<p><\/p>\n\n\n\n<p>The Reserve Bank of India (RBI) has introduced two types of banks: Small Finance Banks (SFBs) and Payment Banks (PBs). Although both aim to provide banking services to the underbanked and unbanked sections of society, there is a significant difference in their objectives, areas of operation, services offered and regulatory requirements.<\/p>\n\n\n\n<p>Let\u2019s break down the key differences between Small Finance Banks and Payments Banks in detail.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-16018d1d wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link has-white-color has-vivid-cyan-blue-background-color has-text-color has-background wp-element-button\" href=\"https:\/\/www.practicemock.com\/?next=https%3A%2F%2Fwww.practicemock.com%2Fs1pricing%2Findex.php%3Fc%3Dpremium&amp;ref=11902\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Join Now! &amp; Take Banking Online Preparation Courses<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<p><\/p>\n\n\n\n<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-16018d1d wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link has-white-color has-vivid-cyan-blue-background-color has-text-color has-background wp-element-button\" href=\"https:\/\/www.practicemock.com\/blog\/static-gk-download-free-pdfs-all-government-banking-exams\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Static GK For All Government, Banking Exams- Download Free PDF<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<p><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What is a Small Finance Bank (SFB)?<\/h2>\n\n\n\n<p>Small finance banks are financial institutions that provide financial services such as accepting deposits and lending to small business units, small and marginal farmers, micro and small industries and other unorganised sector entities.<\/p>\n\n\n\n<p><strong>Main Objectives:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>To enhance financial inclusion by providing credit and financial services to the underserved and unbanked.<\/li>\n\n\n\n<li>To mobilise savings from rural and semi-urban areas.<\/li>\n<\/ul>\n\n\n\n<p><strong>Services Offered:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Accept all types of deposits<\/li>\n\n\n\n<li>Provide loans and advances to micro and small enterprises, agriculture and low-income individuals.<\/li>\n\n\n\n<li>Provide ATM\/Debit Cards, Internet Banking and Mobile Banking.<\/li>\n\n\n\n<li>Can distribute mutual funds and insurance products permitted by the RBI.<\/li>\n<\/ul>\n\n\n\n<p><\/p>\n\n\n\n<p><\/p>\n\n\n\n<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-16018d1d wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link has-white-color has-vivid-cyan-blue-background-color has-text-color has-background wp-element-button\" href=\"https:\/\/www.practicemock.com\/blog\/weekly-current-affairs-download-free-pdf\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Weekly Current Affairs- Download Free PDF<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<p><\/p>\n\n\n\n<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-16018d1d wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link has-white-color has-vivid-cyan-blue-background-color has-text-color has-background wp-element-button\" href=\"https:\/\/www.practicemock.com\/blog\/the-hindu-editorial-vocabulary\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>The Hindu Editorial Vocabulary- Download Free PDF<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<p><\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><a href=\"https:\/\/www.practicemock.com\/?next=https%3A%2F%2Fwww.practicemock.com%2Fs1pricing%2Findex.php%3Fc%3Dpremium&amp;ref=10889\"><img loading=\"lazy\" decoding=\"async\" width=\"1300\" height=\"500\" src=\"https:\/\/www.practicemock.com\/blog\/wp-content\/uploads\/2025\/05\/Banking-Pro-Course-9.png\" alt=\"\" class=\"wp-image-149812\"\/><\/a><\/figure>\n\n\n\n<p><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What is a Payments Bank (PB)?<\/h2>\n\n\n\n<p>Payments Bank offers small savings accounts and payment\/remittance services to the migrant labour workforce, low-income households, small businesses and other unorganised sector entities.<\/p>\n\n\n\n<p><strong>Key Objectives:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>To provide basic banking services such as deposits, remittances and digital transactions in areas where the reach of traditional banks is limited.<\/li>\n\n\n\n<li>To promote a cashless economy and enhance digital financial inclusion.<\/li>\n<\/ul>\n\n\n\n<p><strong>Services Offered:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Accept deposits up to Rs 2 lakh per customer (limit set by RBI by 2024).<\/li>\n\n\n\n<li>Facilitate money transfers, bill payments, and mobile recharges.<\/li>\n\n\n\n<li>Issue debit cards\/ATM cards.<\/li>\n\n\n\n<li>Offer UPI and digital wallet services.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Key Differences Between Small Finance Banks and Payment Banks<\/h2>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>Parameter<\/strong><\/td><td><strong>Small Finance Bank<\/strong><\/td><td><strong>Payment Bank<\/strong><\/td><\/tr><tr><td><strong>Objective<\/strong><\/td><td>Financial inclusion through deposit and lending services<\/td><td>Promote digital payments and remittances<\/td><\/tr><tr><td><strong>Deposit Acceptance<\/strong><\/td><td>Accepts all types of deposits (savings, fixed, recurring)<\/td><td>Accepts only demand deposits (up to \u20b92 lakh)<\/td><\/tr><tr><td><strong>Lending Services<\/strong><\/td><td>Can provide loans and advances<\/td><td>Cannot provide loans or credit products<\/td><\/tr><tr><td><strong>Target Audience<\/strong><\/td><td>Migrant workers, small businesses, and digital users<\/td><td>Migrant workers, small businesses, digital users<\/td><\/tr><tr><td><strong>Capital Requirement<\/strong><\/td><td>\u20b9200 crore<\/td><td>\u20b9100 crore<\/td><\/tr><tr><td><strong>Priority Sector Lending<\/strong><\/td><td>75% of ANBC must be allocated to priority sectors<\/td><td>Not applicable<\/td><\/tr><tr><td><strong>Investment of Deposits<\/strong><\/td><td>Can use deposits for lending<\/td><td>Must invest in government securities<\/td><\/tr><tr><td><strong>Credit Card Issuance<\/strong><\/td><td>Not allowed<\/td><td>Not allowed<\/td><\/tr><tr><td><strong>Examples<\/strong><\/td><td>AU Small Finance Bank, Ujjivan Small Finance Bank<\/td><td>Paytm Payments Bank, Airtel Payments Bank<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p><\/p>\n\n\n\n<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-16018d1d wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link has-white-color has-vivid-cyan-blue-background-color has-text-color has-background wp-element-button\" href=\"https:\/\/www.practicemock.com\/?next=https%3A%2F%2Fwww.practicemock.com%2Fs1pricing%2Findex.php%3Fc%3Dpremium&amp;ref=11902\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Join Now! &amp; Take Banking Online Preparation Courses<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<p><\/p>\n\n\n\n<p><\/p>\n\n\n\n<p class=\"has-text-align-center\"><em><strong>Join our exclusive Telegram group where our experts are ready to answer all your queries, guide you in banking exam preparation, and give personalised tips to boost your success. Get access to real-time solutions, expert advice, and valuable resources to improve your study journey. [Click here to join now!]<\/strong><\/em><\/p>\n\n\n\n<p><\/p>\n\n\n\n<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-16018d1d wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link has-white-color has-vivid-red-background-color has-text-color has-background wp-element-button\" href=\"https:\/\/t.me\/bankgovtjobexamprep\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>PracticeMock Telegram group Link<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<p><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Banking Free Mock Test<\/h3>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><a href=\"https:\/\/www.practicemock.com\/ibps-rrb-officer-test-series\/?ref=11902\" target=\"_blank\" rel=\"noreferrer noopener\">IBPS RRB PO Free Mock Test <\/a><\/td><td><a href=\"https:\/\/www.practicemock.com\/ibps-po-test-series\/?ref=11902\" target=\"_blank\" rel=\"noreferrer noopener\">IBPS PO Free Mock Test <\/a><\/td><\/tr><tr><td><a href=\"https:\/\/www.practicemock.com\/sbi-po-test-series\/?ref=11902\" target=\"_blank\" rel=\"noreferrer noopener\">SBI PO Free Mock Test<\/a><\/td><td><a href=\"https:\/\/www.practicemock.com\/ibps-so-test-series\/?ref=11902\" target=\"_blank\" rel=\"noreferrer noopener\">IBPS SO Free Mock Test<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/www.practicemock.com\/ibps-rrb-assistant-test-series\/?ref=11902\" target=\"_blank\" rel=\"noreferrer noopener\">IBPS RRB Clerk Free Mock Test<\/a><\/td><td><a href=\"https:\/\/www.practicemock.com\/ibps-clerk-test-series\/?ref=11902\" target=\"_blank\" rel=\"noreferrer noopener\">IBPS Clerk Free Mock Test<\/a><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p><\/p>\n\n\n\n<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-16018d1d wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link has-white-color has-vivid-cyan-blue-background-color has-text-color has-background wp-element-button\" href=\"https:\/\/www.practicemock.com\/?next=https%3A%2F%2Fwww.practicemock.com%2Fs1pricing%2Findex.php%3Fc%3Dpremium&amp;ref=10889\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Start Preparation on Banking Exam- Click Here<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<p><\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><a href=\"https:\/\/www.practicemock.com\/?next=https%3A%2F%2Fwww.practicemock.com%2Fs1pricing%2Findex.php%3Fc%3Dpremium&amp;ref=10889\" target=\"_blank\" rel=\"noreferrer noopener\"><img loading=\"lazy\" decoding=\"async\" width=\"1141\" height=\"620\" src=\"https:\/\/www.practicemock.com\/blog\/wp-content\/uploads\/2025\/05\/New-Banking-Most-Affordable-Courses-1-5.png\" alt=\"banking courses\" class=\"wp-image-150237\"\/><\/a><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\">Difference between Small Finance Bank and Payment Bank FAQ<\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1749017697844\"><strong class=\"schema-faq-question\">Can a Payments Bank convert into a Small Finance Bank?<\/strong> <p class=\"schema-faq-answer\">Yes, as per RBI guidelines, a Payments Bank can apply for conversion into a Small Finance Bank after five years of operations, subject to regulatory approval.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1749017747855\"><strong class=\"schema-faq-question\">Is it safe to deposit money in Small Finance Banks and Payments Banks?<\/strong> <p class=\"schema-faq-answer\">\u00a0Yes, both SFBs and PBs are regulated by RBI, and deposits up to \u20b95 lakh per depositor are insured under the Deposit Insurance and Credit Guarantee Corporation (DICGC).<\/p> <\/div> <\/div>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Here, we provide the difference between a Small Finance Bank and a Payment Bank. Candidates can check the detailed difference in the article below.<\/p>\n","protected":false},"author":13,"featured_media":151504,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_uag_custom_page_level_css":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"footnotes":""},"categories":[3998],"tags":[],"class_list":["post-151471","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banking-awareness"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.9 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What is the difference between Small Finance Bank and Payment Bank?<\/title>\n<meta name=\"description\" content=\"Here, we provide the difference between a Small Finance Bank and a Payment Bank. 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I cleared many bank exams time by time but couldn't join because of my passion towards writing. I write blogs to help aspirants prepare for Banking and Insurance exams. These blogs turn out to be a one-stop destination for comprehensive information on some of the biggest competitive exams like SBI PO\/Clerk, IBPS PO\/Clerk, IBPS RRB PO\/Clerk and RBI. My ultimate goal is to provide accurate and easy-to-understand information, covering topics like exam patterns, syllabus, study techniques, and more. Join me on this journey of knowledge!","url":"https:\/\/www.practicemock.com\/blog\/author\/ss8860409gmail-com\/"},{"@type":"Question","@id":"https:\/\/www.practicemock.com\/blog\/what-is-the-difference-between-small-finance-bank-and-payment-bank\/#faq-question-1749017697844","position":1,"url":"https:\/\/www.practicemock.com\/blog\/what-is-the-difference-between-small-finance-bank-and-payment-bank\/#faq-question-1749017697844","name":"Can a Payments Bank convert into a Small Finance Bank?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"Yes, as per RBI guidelines, a Payments Bank can apply for conversion into a Small Finance Bank after five years of operations, subject to regulatory approval.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/www.practicemock.com\/blog\/what-is-the-difference-between-small-finance-bank-and-payment-bank\/#faq-question-1749017747855","position":2,"url":"https:\/\/www.practicemock.com\/blog\/what-is-the-difference-between-small-finance-bank-and-payment-bank\/#faq-question-1749017747855","name":"Is it safe to deposit money in Small Finance Banks and Payments Banks?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"\u00a0Yes, both SFBs and PBs are regulated by RBI, and deposits up to \u20b95 lakh per depositor are insured under the Deposit Insurance and Credit Guarantee Corporation (DICGC).","inLanguage":"en-US"},"inLanguage":"en-US"}]}},"uagb_featured_image_src":{"full":["https:\/\/www.practicemock.com\/blog\/wp-content\/uploads\/2025\/06\/What-is-the-difference-between-small-finance-bank-and-payment-bank.png",1200,675,false],"thumbnail":["https:\/\/www.practicemock.com\/blog\/wp-content\/uploads\/2025\/06\/What-is-the-difference-between-small-finance-bank-and-payment-bank.png",150,84,false],"medium":["https:\/\/www.practicemock.com\/blog\/wp-content\/uploads\/2025\/06\/What-is-the-difference-between-small-finance-bank-and-payment-bank.png",300,169,false],"medium_large":["https:\/\/www.practicemock.com\/blog\/wp-content\/uploads\/2025\/06\/What-is-the-difference-between-small-finance-bank-and-payment-bank.png",640,360,false],"large":["https:\/\/www.practicemock.com\/blog\/wp-content\/uploads\/2025\/06\/What-is-the-difference-between-small-finance-bank-and-payment-bank.png",640,360,false],"1536x1536":["https:\/\/www.practicemock.com\/blog\/wp-content\/uploads\/2025\/06\/What-is-the-difference-between-small-finance-bank-and-payment-bank.png",1200,675,false],"2048x2048":["https:\/\/www.practicemock.com\/blog\/wp-content\/uploads\/2025\/06\/What-is-the-difference-between-small-finance-bank-and-payment-bank.png",1200,675,false],"web-stories-poster-portrait":["https:\/\/www.practicemock.com\/blog\/wp-content\/uploads\/2025\/06\/What-is-the-difference-between-small-finance-bank-and-payment-bank.png",640,360,false],"web-stories-publisher-logo":["https:\/\/www.practicemock.com\/blog\/wp-content\/uploads\/2025\/06\/What-is-the-difference-between-small-finance-bank-and-payment-bank.png",96,54,false],"web-stories-thumbnail":["https:\/\/www.practicemock.com\/blog\/wp-content\/uploads\/2025\/06\/What-is-the-difference-between-small-finance-bank-and-payment-bank.png",150,84,false]},"uagb_author_info":{"display_name":"Sweta Singh","author_link":"https:\/\/www.practicemock.com\/blog\/author\/ss8860409gmail-com\/"},"uagb_comment_info":4,"uagb_excerpt":"Here, we provide the difference between a Small Finance Bank and a Payment Bank. Candidates can check the detailed difference in the article below.","_links":{"self":[{"href":"https:\/\/www.practicemock.com\/blog\/wp-json\/wp\/v2\/posts\/151471","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.practicemock.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.practicemock.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.practicemock.com\/blog\/wp-json\/wp\/v2\/users\/13"}],"replies":[{"embeddable":true,"href":"https:\/\/www.practicemock.com\/blog\/wp-json\/wp\/v2\/comments?post=151471"}],"version-history":[{"count":0,"href":"https:\/\/www.practicemock.com\/blog\/wp-json\/wp\/v2\/posts\/151471\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.practicemock.com\/blog\/wp-json\/wp\/v2\/media\/151504"}],"wp:attachment":[{"href":"https:\/\/www.practicemock.com\/blog\/wp-json\/wp\/v2\/media?parent=151471"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.practicemock.com\/blog\/wp-json\/wp\/v2\/categories?post=151471"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.practicemock.com\/blog\/wp-json\/wp\/v2\/tags?post=151471"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}