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Payment Bank to Small Finance Bank
Why is it in the news ?
- RBI released final guidelines and opened the window for applicants to approach the regulator at any point of time for 'on-tap' licensing of Small Finance Banks (SFBs).
More in the news
- Limit raised: The minimum paid-up voting equity capital or net worth requirement has been set at Rs 200 crore, up from Rs 100 crore as set earlier.
- For primary urban cooperative banks: The initial requirement of net worth shall be at Rs 100 crore, which will have to be increased to Rs 200 crore within five years from the date of commencement of business.
- Payments Banks have also been allowed to apply for conversion into SFB after five years of operations, if they are meet other eligibility norms.
- Stake Share Limit:
(1) Investors, other than promoters, will not be allowed to hold more than 10 percent stake in the SFB.
(2) However, in case of NBFCs, micro-finance institutions and local area banks, where non-promoters hold more than 10 percent limit, RBI may consider giving 3 years time to dilute the stake.
- The aim behind these to provide financial inclusion to sections of the economy not being served by other banks, such as small business units, small and marginal farmers, micro and small industries and unorganised sector entities
- SFBs will be given scheduled bank status immediately and will be allowed to open banking outlets from the date of commencement of operations.
- About Small finance banks (SFBs):
(1) SFBs are a type of niche banks in India.
(2) Banks with a small finance bank license can provide basic banking service of acceptance of deposits and lending.
Source
The Hindu.