Small Finance Banks (SFB) and Payment Banks (PB) are called Differentiated Banks. Briefly explain the functions of SFBs and PBs.

Small Finance Banks (SFBs): Small Finance Banks are the financial institutions which provide financial services to the unserved and unbanked regions of the country. They are registered as a Public Limited Company under the Companies Act, 2013. Functions of Small Finance Banks Access to Financial Services: The main function of small finance banks is to expand access to financial services in rural and semi-urban areas. These banks can do almost everything that a normal commercial bank can do but at a much smaller scale. Basic Banking Services: They offer basic banking services, accept Deposits and lend to underserved sections of customers, including Small Business units, Small and Marginal Farmers, Micro and Small Industries, and even entities in the unorganized sector. Alternative Institution: Small Finance Banks provide an alternative to some of the existing institutions with their mandated focus on small and medium businesses, the informal sector, small and marginal farmers and thus on increasing financial inclusion and serving a variety of unserved clients in the hinterland and tier three and four cities and towns. Non Risk Sharing: They also undertake other Non-risk sharing simple financial services activities, not requiring any commitment of own funds, such as the distribution of Mutual Fund Units, Insurance Products, Pension Products, etc. Payment Banks (PBs): The objectives of setting up of a payments bank is to further financial inclusion by providing Small Savings Accounts and payments / remittance services to Migrant Labour Workforce, low-income households, Small Businesses other unorganised sector entities and other users. Scope of Activities of Payment Banks Acceptance of demand deposits, initially restricted to holding a maximum balance of ₹ 1,00,000 per individual customer. Issuance of ATM / Debit Cards. They cannot issue Credit Cards. They are not allowed to give Loans. Payments and Remittance services through various channels. Distribution of Non-risk sharing simple financial products like Mutual Fund units and Insurance Products, etc. They are only allowed to invest the money received from customers. Deposits into Government Securities. They cannot accept NRI deposits. A Payments Bank Account holder would be able to deposit. Withdraw money through any ATM or other Service Providers. Payments Licensees would be granted to Mobile Firms, Supermarket chains and others to cater to Individuals and Small Businesses.