Small finance bank licences next month

The RBI had received 72 applications for small finance bank licences and 41 applications for payment bank licences.

RBI Governor Raghuram Rajan.

After granting approval to 11 entities for payments banks, RBI on Wednesday said it will announce small finance bank licences next month and allayed concerns that these new entities would pose any threat to existing banks.

RBI Governor Raghuram Rajan said that new payments banks would not pose any competitive threat to the existing banks and these new entities would rather serve as ‘feeder’ for the universal banks.

The RBI had received 72 applications for small finance bank licences and 41 applications for payment bank licences.

Out of these, RBI yesterday granted ‘in principle’ approval for payments bank to 11 entities, including big names like Reliance Industries, Aditya Birla Nuvo and Tech Mahindra, as also Airtel and Vodafone.

Those having applied for small finance banks include DHFL, IIFL Holdings, Lulu Forex, SKS Microfinance, UAE Exchange and Ujjivan Financial.

Rajan said that RBI would announce small finance bank licences next month.

The small finance banks can provide basic banking services like accepting deposits and lending to the unbanked sections such as small farmers, micro business enterprises, micro and small industries and unorganised sector entities.

The payments banks would be allowed to provide payments and remittance services, but can not issue credit cards or accept deposits beyond Rs. 1 lakh. They can issue ATM and debit cards and also distribute mutual fund and insurance products.

Rajan said introduction of Payments Banks will revolutionise banking, make it very exciting for customers and existing lenders will have to improve service to retain depositors.

“I’ve no doubt banking will become very competitive and universal banks have to provide full service to retain customers,” Rajan said during a chat with SBI Chairman Arundhati Bhattacharya at the conference organised by the country’s largest lender.

TH

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#20, #2015, #august

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