Niche Banks Licensing


Fortunately, RBI has announced a deadline extension for submission of licensing applications of Small Finance banks and Payment banks. The deadline was extended from 16th January 2015 to 2nd February 2015, taking into concern the numerous difficulties reported by parties. RBI shows more concern in strengthening financial inclusion and to increase the savings from private sector. RBI responded to various queries raised by the entities. Among the clarifications done, RBI stresses on the required usage of “Small Finance Bank” in their names and the criteria of minimum paid-up capital (Rs.100 crore) availability during licensing. RBI conveyed exciting news for the parties which convey no estimated ceiling has been decided for licensing. If the party wishes to take up an IPO, prior approval is set to be necessary.

Non-resident Indians are also allowed to apply for payment and small finance banks though conditions are applied such as they have to return to India. Unfortunately, payment banks are obstructed to take deposits form NRIs. Payment banks can offer locker and vault facilities though their daily closing balance has been restricted to Rs.100, 000 per individual customer. Payment banks are further not allowed to finance utility bills. Till now, RBI has received 176 and 144 queries regarding the licensing process. RBI’s further actions and restrictions regarding small finance banks and payment banks will be known by 2nd February 2015.

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