RBI Accepting Comments on Bank Licensing Guidelines (July 22, 2014)
The Reserve Bank of India recently issued draft guidelines for companies seeking bank licenses in two niche banking categories: payments banks and small banks. The purpose of the guidelines is to boost financial inclusion by enabling smaller banks to set up in India’s remote areas to reach more businesses, farmers and low-income households.
Payments banks can accept deposits and funds remittances but cannot provide loans. Small banks can lend but have more limited area of operations than full-fledged commercial lenders, according to reports. The entities eligible to set up a payments bank include existing non-bank prepaid instrument issuers, mobile telecoms, nonbanking finance companies (NBFCs) and supermarket chains. Entities eligible to set up a small bank include resident individuals with 10 years of experience in banking and finance, NBFCs, micro-finance institutions and local area banks, the RBI said in an announcement last week.
Naveen Surya, managing director at Mumbai, India-based payments solutions provider ItzCash Card Ltd. tells Paybefore the initiative “will facilitate ease and convenience for a large, untapped segment to undertake basic payment and remittance transactions, and also get exposed to basic banking [services].”
Comments on the draft guidelines are due Aug. 28, 2014, and can be emailed or sent to the Chief General Manager, Reserve Bank of India, Department of Banking Operations and Development, Central Office, 13th floor, Central Office Building, Shahid Bhagat Singh Marg, Mumbai-400001. Final guidelines will be issued and the process of accepting applications for setting up payments banks and small banks will begin after receiving feedback on the draft guidelines.
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