September 14, 2019 1:57:23 am
The Reserve Bank of India (RBI) on Friday proposed a minimum equity capital of Rs 200 crore to set up a small finance bank (SFB) under the ‘on tap’ licence regime to provide saving vehicles for “the unserved and underserved sections of the population and supply credit to small units and small and marginal farmers”.
Unveiling the draft guidelines for ‘on tap’ licensing of SFBs in the private sector, the RBI said individuals and professionals with 10 years experience in banking, existing non-banking financial companies (NBFCs), micro finance institutions (MFIs)and local area banks in the private sector, which are controlled by residents, can opt for conversion into SFBs.
It further said proposals from public sector entities and large industrial houses, business groups and autonomous boards/bodies will not be entertained.
An SFB is primarily set up to undertake basic banking activities of acceptance of deposits and lending to unserved and underserved sections, including small business units, small and marginal farmers, micro and small industries, and unorganised sector entities. The objectives of setting up of SFBs is to further financial inclusion and supply of credit “through high technology-low cost operations,” the draft said.
“The minimum paid-up voting equity capital for small finance banks shall be Rs 200 crore, except for such small finance banks which are converted from UCBs,” said the draft on which the central bank has sought comments from the stakeholders by October 12.
📣 The Indian Express is now on Telegram. Click here to join our channel (@indianexpress) and stay updated with the latest headlines
- The Indian Express website has been rated GREEN for its credibility and trustworthiness by Newsguard, a global service that rates news sources for their journalistic standards.