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The Reserve Bank of India will issue licences for small finance banks and payment banks by August-end.
“I hope to be able to announce a new set of bank licences, at least one set of bank licences by August-end…,” RBI Governor Raghuram Rajan said in a post-policy conference, adding that the central bank is reviewing all regulations governing the markets to see where there is scope for further liberalisation once macro-economic uncertainty diminishes.
In early February, the RBI received 72 applications for starting small finance banks and 41 applications for payment banks from companies/entities /individuals.
Last month, RBI Deputy Governor SS Mundra said licences for payment and small banks should come during the course of this year. “Both are work-in-progress and hopefully both should happen in the course of this calendar year.”
Applicants Applicants for payment bank licence include big names, such as government-owned Department of Posts or India Post, Tech Mahindra, NSDL and NSE Strategic Investment Corporation, apart from Mukesh Ambani-owned Reliance Industries, Bharti Airtel’s Airtel M Commerce Services and Kumar Mangalam Birla’s Aditya Birla Nuvo.
In their individual capacity, Kishore Biyani, founder and owner, Future group; Dilip Shantilal Shanghvi, founder of Sun Pharmaceutical Industries; MG George Muthoot, Chairman of the Muthoot Group from Kochi and Vijay Shekhar Sharma, Chairman and MD of One97 Communications, have applied for payment bank licences.
According to guidelines issued by the RBI in November, payment banks can accept demand deposits, subject to a cap of ₹1 lakh a customer, and provide payment and remittance services through the Internet, branches, business correspondents and mobile banking.
Dewan Housing Finance (DHFL), IIFL Holdings, Jalandhar-based Capital Local Area Bank, SKS Microfinance and UAE Exchange & Financial Services, among others, have applied for small finance bank licences.
The small finance banks will undertake basic banking activities of accepting deposits and lending to the unbanked sections, such as micro business units, small and marginal farmers, micro and small industries and unorganised sector entities.
At least 50 per cent of a small finance bank’s loan portfolio should constitute loans and advances of up to ₹25 lakh.
They can accept deposits and function like a mini bank. A small finance bank can transition into a universal bank, provided it has an impeccable track record.
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