Small finance bank licences likely next month: Raghuram Rajan

After granting in-principle approval to 11 applicants for payments banks, Reserve Bank of India (RBI) Governor Raghuram Rajan said licences for small finance banks would be announced next month.

Payments banks and small finance banks are coming up in the country to deepen financial inclusion. “Payments banks will complement universal banks. They are not competing with them. Universal bank have edge over the payments banks with wider product and service,” said Rajan at an event here Stock Market Trading Tips

RBI had received a total of 113 applications from players keen to set up niche banks like payments banks and small finance banks. There were 72 applications for small finance banks and 41 applications for payments banks. Payments banks would act as feeders, reducing the cost of access for customers, the RBI governor said.

Payments banks can accept deposits of up to Rs 1 lakh and can offer current and savings account deposits. They can also issue debit cards and offer internet banking. But they are not allowed to lend or issue credit cards Indian stock market astrology prediction

On the other hand, small finance banks will be similar to the existing commercial lenders and will undertake basic banking activities of accepting deposits and lending to unserved and under-served sections.

However, the maximum loan size and investment limit exposure to single and group obligors cannot be more than 10 per cent and 15 per cent of its capital funds, respectively. Apart from this, at least 50 per cent of their loan portfolio has to include loans and advances of up to Rs 25 lakh, according to RBI regulations. After the draft guidelines for small finance banks had come out, the enthusiasm for it was limited.

However, in the final guidelines, RBI had removed the restrictions on geography for the area of operations, thus leading to greater interest by players for small banks. “Payments banks is a worry in savings bank space since they may offer higher rates to attract funds,” Rajan said Himanshu Tiwari Astrologer Blog