RBI moots new rules for small bank li­cence

Wants More Pay­ment Cos, NBFCs As SFBs

The Times of India (New Delhi edition) - - Times Business - TIMES NEWS NET­WORK

Ben­galuru: In a bid to get more par­tic­i­pants in the small fi­nance bank­ing space, the Re­serve Bank of In­dia (RBI) on Fri­day said it is think­ing of per­mit­ting small pri­vate en­ti­ties, pay­ment banks, NBFCs, MFIs and co­op­er­a­tive banks to ap­ply and con­vert into a small fi­nance bank (SFB).

The RBI clar­i­fied only small pri­vate en­ti­ties will be al­lowed to set up SFBs, and the govern­ment would not en­ter­tain pro­pos­als from pub­lic sec­tor en­ti­ties and large in­dus­trial house or busi­ness groups, and au­ton­o­mous bod­ies. Joint ventures be­tween two or more pro­moter groups will also not be al­lowed to ap­ply. In case of a hold­ing com­pany, the hold­ing com­pany could have an­other fi­nanc­ing firm, but it must not do the same busi­nesses as the SFB.

The min­i­mum cap­i­tal re­quire­ment was Rs 100 crore in 2014. The RBI pro­poses to keep it the same — with the SFB hav­ing to in­crease min­i­mum net worth to Rs 200 crore within five years of op­er­a­tions.

While pro­mot­ers of uni­ver­sal banks will be not be al­lowed to start an SFB, pro­mot­ers of pay­ment banks will be al­lowed, the RBI said. With this pro­posal, the ex­tent of op­er­a­tions of pay­ment banks would in­crease as, un­der cur­rent reg­u­la­tions, pay­ment banks are not al­lowed to lend. They are also not al­lowed to col­lect de­posits above Rs 1 lakh from cus­tomers. As an SFB, they would be al­lowed to take de­posits of any amount.

They would also be al­lowed to lend to any­one, pro­vided the fo­cus is on small lend­ing to in­di­vid­u­als, SMEs, farm­ers and small scale in­dus­tries. SFBs can also pro­vide re­mit­tances, have ATMs and sell pen­sions in ad­di­tion (pay­ment banks can sell only MFs, in­sur­ance and third-party loans).

The RBI has, how­ever, main­tained that SFBs should get listed within three years of op­er­a­tions af­ter reach­ing a net worth of Rs 500 crore — a pro­posal that does not bring any re­lief for Equitas Hold­ings, which has cur­rently been told to list by the reg­u­la­tor.

In 2014, the RBI in­structed that pro­moter’s hold­ing in an SFB should be at least 40% and grad­u­ally brought down to 26% within 12 years of op­er­a­tions.

Now, the RBI pro­poses the pro­moter should hold a min­i­mum 40% for a lock-in pe­riod of the first five years, and re­duce stake to a max­i­mum of 30% within 10 years, and a max­i­mum of 15% in 15 years.


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