Ad Here  
Just 660 days! Target over-ambitious... A bank for women, by women From lazy banking to easy banking Nothing much can happen…. Aadhaar, niraadhaar and banking Merger mania haunts banks Growing gainfully Capital base of regional rural banks raised Ferrying digital banking to Lakshadweep Reaching out: is it slowing down? Fund healthcare clinics in villages... Lacklustre credit expansion Growing volume of stressed assets… Holy or unholy? Bottomlines shrink, bad loans rise... Banking overhauling or reorganisation? Cut in repo rate – lower than expected Small is ‘more’ beautiful The paradox: clamour for the Goliath and David Well-lived... Insatiable appetite for credit Banking on Risk United India Insurance - Rs 110 crore losses have been claimed till now due to floods in Tamil Nadu How okay are new banks? Reaching the Unreached… What is the priority – mergers or NPA reduction? Drop in SLR- sparing lendable resources Too big to fail and too small to sail Stage set for Indian ‘avatar’ of foreign banks Big bank merger, bigger expectations Indian customers are tech savvy Who is the real beneficiary? One down in private sector Ernakulam excels... Bank deposits account for 46.3 per cent of household savings Two banks: their jubilees and performances Smart banking in smart cities Another route for achieving financial inclusion How ‘secure’ are the secured loans? It’s a war on black money, support it. Managing NPAs... Anytime banking to anywhere banking Monetary policy continues to adopt dis-inflationary path Grows Bigger Why any time money? Cautious and considerate Banking in Telangana Small finance banks offer high interest rates Hesitancy in announcing year-end results Targets continue to be ad hoc Financial inclusion vs unclaimed deposits Good, bad and ugly Why priority status? Emerging crisis New capitals of Migrant banks Greet Lakshmi the banking robot Needed a Banking Atlas LVB- A supermarket of financial services Drastic decline in asset quality All that glitters is not gold... Small finance payment banks... Perhaps small is more beautiful than big! Rationalised Governance in Reverse Gear? Cradle of banks to a smart city... A development bank for BRICS Thirty more cities seek to become SMART Payment banks have arrived Mega merger is on The collaboration suite of cyber criminals New bank licences, at last... A new development bank rising in the east…
Small finance payment banks...

RBI has COME out with guidelines for issuing licences for small finance banks as well as for payment banks.

The objectives of the small finance banks are: “primarily to undertake basic banking activities of acceptance of deposits and lending to un-served and under-served sections including small business units, small and marginal farmers, micro and small industries and unorganised sector entities.”

The initial paid up capital is Rs.100 crore with promoter’s minimum initial contribution fixed at 40 per cent.  These banks can open branches anywhere. They would be subjected to all prudential norms and regulations of RBI as applicable to existing commercial banks, including SLR and CRR requirements.  They are required to extend 75 per cent of their net bank credit to the sectors eligible for priority sector lending. They are also to ensure that at least 50 per cent of their loan portfolios constitute loans and advances of less than Rs. 25 lakh per account.

The other set of small banks proposed is the “payment banks.” Their objectives would be to further increase financial inclusion by providing small savings accounts and facilitating payment and remittance services to migrant labour workforce, low income households, small businesses, other unorganised sector entities and other users.

The list of eligible applicants is wide: existing non-bank pre-paid payment instrument-issuers and other entities such as individuals and professionals, NBFCs, mobile telephone companies, super-market chains, companies and real sector cooperatives, that are owned and controlled by residents. Public sector entities may apply to set up payments banks. They can mobilise small deposits up to Rs. 100,000 and adhere to the statutory requirements, but cannot lend.

Considering the inherent diversities of the Indian economy, more small banks are certainly necessary. However, working under the stringent stipulated conditions the viability of these banks may be under duress for long. The small gramin banks, which have been made bigger recently by merging 196 of them into 57, would now have a competitor in the small finance banks, to share their business.


Author :
Reported On :
Sector :
IE, the business magazine from south was launched in 1968 and pioneered business journalism in south. Through the 45 years IE has been focusing on well-presented and well-researched articles. When giants in the industry stumbled to keep pace with the digital revolution, IE stayed affixed embracing technology.
Read more
Economist Communications Ltd is committed to ensuring that your privacy is protected.
Read more
You agree that your use of this Website and the purchase of the magazine will be governed by these terms and conditions.
Read more
S-15, Industrial Estate,
Chennai - 600 032.
PHONE: +91 44 22501236