Clearing the way for corporates to enter differentiated banks segments, the Reserve Bank of India (RBI) is likely to issue final guidelines on small and payments banks within two-three months. The final norms will allow micro finance institutions, telecom players, non-banking finance companies (NBFCs) and public sector companies eligible to apply for bank licences once RBI invites applications for the same.
India’s central bank, which back in July floated draft guidelines for small and payment banks, had sought comments until August 28. RBI presently is in the process of examining the suggestions received and is in the process of finalising the norms for such banks.
With an objective of furthering financial inclusion, the Reserve Bank of India (RBI) floated draft guidelines for setting up of two new types of banks -payment banks and small banks. While, small banks will disburse small-ticket loans to farmers and businesses, payment banks will cater to marginalized sections of society, including migrant labourers, for collecting deposits and remitting funds.
According to the guidelines, a Payment Bank though would be able to take deposits, but cannot lend and would have to invest all the funds in government securities. On the other hand, small Bank would be allowed to lend, but with restrictions on where they can operate.
These two types of banks will have uniform capital requirement of Rs 100 crore as against Rs 500 crore required for normal commercial banks, according to the guidelines. However, of the minimum capital requirement of Rs 100 crore, the promoters’ initial minimum contribution will be at-least 40%, to be locked in for a period of five years. This shareholding would be later brought down to 40% within three years, 30% within a period of 10 years, and to 26% within 12 years from the date of commencement of business of the bank.