The Reserve Bank of India is set to announce one set of differentiated bank licences — payments bank and small finance banks — this month.
“Finally, a set of recommendations will be presented to the RBI board, which will decide the final list of successful applications. As I said before, I hope to announce at least one set of licences before the end of this month,” RBI Governor Raghuram Rajan said after announcing the third bi-monthly monetary policy.
In all, the RBI received 41 applications for payments bank licence and 72 for small finance bank licence.
Now, an internal committee of the RBI, comprising the Deputy Governors and the Governor, is going through each of these applications again, he added.
Rajan confirmed that the RBI has received recommendations from the external advisory committees on payments and small finance banks. The payments bank applications were vetted by a committee chaired by former banker Nachiket Mor, while for small finance bank applications, the committee was headed by Usha Thorat, former Deputy Governor of RBI.
A number of corporate houses, including Reliance Industries, Aditya Birla Nuvo, Bharti Group, Future Group Tech Mahindra and a host of payment wallet companies, have applied for payments bank licences. Many banks, including State Bank of India, Kotak Mahindra Bank, and Bank of India have formed joint ventures with the applicants.
In November last year, the RBI had issued final guidelines for both types of proposed banks.
The small banks could later convert into universal banks following regulatory approvals.
A payments bank will not be allowed to lend and will invest 75 per cent of its funds in government securities. Its main focus would be to offer remittance services and simple financial products. The minimum capital requirement is set at ₹100 crore. Such entities will be allowed to accept savings deposits of up to ₹1 lakh a customer.
Small finance banks will be similar to the existing commercial lenders. They’ll undertake the basic banking activity of accepting deposits, and will lend mainly to the unserved and underserved sections. The maximum loan size and investment limit exposure to single and group obligators cannot be more than 10 per cent and 15 per cent of capital funds, respectively. Apart from this, at least 50 per cent of the loan portfolio has to include loans and advances of up to ₹25 lakh.
Common KYC & e-wallets The central bank is working on a common ‘know-your-customer’ process across the entire financial sector. “It is work-in-progress and we have identified the common set of information and application... Some tests and work is going on,” said R Gandhi, Deputy Governor.
On e-wallets, HR Khan, Deputy Governor, said that it is catching up very fast