Applications to open small finance banks and
payments banks have been extended by the Reserve Bank of India (RBI) to 2
February from 16 January.
The RBI in a statement said the decision was taken
in view of the “request seeking extension” from applicants.
RBI also put out clarifications to 320 queries it
received from individuals and organizations on the guidelines released on 27
November. The central bank clarified that promoters of large corporate groups
with Rs.1,000 crore in assets and non-financial business, accounting for 40% of
total assets or revenues, will not be able to become the promoter of a small
bank. Groups having two non-banking finance companies (NBFCs) will have to fold
the operating NBFC into the bank and will only be allowed to continue the
non-operative holding company.
“The guidelines indicate that on conversion into a
small finance bank, an NBFC/MFI (micro-finance institution) will cease to exist
and all its business which a bank can undertake should fold into the bank, and
the activities which a bank cannot undertake be divested/disposed of. The other
financial and non-financial services activities of the promoters should be kept
distinctly ring-fenced and not co-mingled with the bank,” RBI said.
Further, an existing co-operative bank cannot
convert into a small bank. Preference will be given to entities which, in the
initial phase, set up the bank in a cluster of under-banked states/districts,
such as in the North-East, East and Central regions of the country, RBI said.
RBI also clarified that there are no ideal number of
branches for a small bank to be eligible for a license. Also, a non-nonresident
Indian (NRI), if he or she decides to return for good to the country, can apply
for a license.
In guidelines issued in November, RBI also issued
norms for payments banks. Both small and payment banks are envisaged to provide
basic savings, deposit, payment and remittance services to people who currently
do not have a bank account, including millions of migrant workers.
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