Former RBI Governor C Rangarajan has called for the Reserve Bank of India (RBI) to give better incentives for setting up Small Finance Banks (SFBs). Speaking at the inauguration of Equitas Towers in Chennai, he noted that India only has about 11 such banks. He believes the current rules do not provide enough motivation for new players to enter this segment.

Dr. Rangarajan praised Equitas Small Finance Bank as a good model for others to follow. He noted that the bank has exceeded many regulatory requirements (rules set by RBI). He suggested that if Equitas applies for a universal bank license (a full-scale banking license) in the future, it would be a good move. He observed that most SFBs eventually want to grow into full universal banks.

The former Governor also shared his views on the path to becoming a big bank. He stated that the performance of an SFB should be the main reason for granting them a full banking license. However, he was critical of the recent mergers of Regional Rural Banks (RRBs). He argued that reducing RRBs to just one per state has weakened their local and regional character.

Equitas Bank has a long history, starting as a microfinance company (lenders to low-income groups). It became an SFB in 2016 and listed on the stock market in 2020. PN Vasudevan, the MD of Equitas, recalled the early days when the bank struggled to find even a small office. Today, they have moved into their own multi-storied corporate office in Chennai.

The bank's financial numbers show strong growth. As of June 2026, Equitas reported gross advances (total loans given) of ₹47,641 crore, growing 27% year-on-year. Total deposits grew by 10% to reach ₹48,976 crore. For the first quarter of FY27, the bank earned a profit of ₹184 crore, a big recovery from the loss of ₹224 crore reported in the same quarter the previous year.

For Indian bank officers and aspirants, this news shows that the SFB sector is becoming a vital part of the banking system. If the RBI introduces new incentives as suggested, we could see more small banks opening up. This would create more job opportunities and career paths for bankers who want to work in regional and rural markets.

At the event, a new book about the bank’s governance and values was also launched. The gathering included top names like N. Rangachary, former Chairman of IRDAI, and leaders from the Murugappa Group. The focus remains on how these small lenders can maintain high standards while aiming for a universal bank status.