Furthering financial inclusion Niche banks — Small Finance Banks and Payments Banks — are finally coming with the Reserve Bank of India (RBI) releasing in late November detailed but separate rules for setting up these banks. The draft guidelines were issued on July 17. In formulating the final rules, the RBI has taken into account the suggestions and feedback. The last date for receiving applications for opening these banks has recently been extended to February 2. Scrutiny and vetting will take some more time before the successful candidates are announced. These are still early days but one noticeable feature so far is the subdued excitement that is defining the prospective applicants. This is in sharp contrast to the enthusiasm that prevailed in the run up to the new full bank licences. In April last, the RBI issued in-principle bank licences to two — infrastructure company IDFC and microfinance lender Bandhan Financial Services. There were other strong eligible contenders, and an elaborate process of vetting the applications from out of a final list of 25 candidates yielded just these two names. Some of those who did not make it might possibly start one or other of these niche banks or wait for the RBI to starts issuing full bank licences on tap. The final rules for setting up these Payments Banks and Small Finance Banks differ only marginally from the draft guidelines. The common objective of these niche or differentiated banks remains the same — furtherance of financial inclusion, which has become a key objective of public policy. Conceptually, Small Banks will provide a whole range of banking products — deposits and loans — but were initially confined to relatively small geographical areas. Importantly, they will focus on smaller businesses and accept relatively small deposits.
Posted on: Mon, 05 Jan 2015 00:25:12 +0000
Trending Topics
© 2015