RBI extends deadline to apply for small finance & payments banks; clarifies norms

The Reserve Bank of India (RBI) has extended the deadline for submitting applications for setting up of small finance banks and payments banks from January 16 to February 2, 2015.

It had issued final guidelines in November for setting up new category of banks to support financial inclusion by providing small savings accounts, payments/remittance services to migrant labour workforce and low income households and supply of credit to small business units among others.

The banking regulator has also clarified on the various norms for setting up 'small finance' and 'payments' banks.

While the regulator had barred large business groups from setting up small finance banks, it has now clarified the threshold for determining such groups. A group with assets of Rs 1,000 crore

with the non-financial business of the group accounting for 40 per cent or more in terms of total assets in terms of total revenue (whichever is higher), will be treated as a large industrial/business group.

Under the guidelines, the central bank has also allowed non-resident Indians (NRIs), if he or she decides to return for good to the country, to apply to set up payment and small finance banks. This is even as the applicants are supposed to be resident Indians.

RBI has also said small finance banks can issue shares with differential voting rights, subject to minimum equity capital of Rs 100 crore being voting equity.

It has also clarified that the holding for non-promoters has been capped at 10 per cent at the time of issue of shares itself by the new bank. In case of existing NBFCs/MFIs converting into small finance banks, RBI may consider providing time up to three years from the date of in-principle approval for the shareholding to be brought down to 10 per cent.

Moreover, small finance banks can also offer payment/remittance products as well as access to ATMs/ POS terminals.

RBI said it open to the idea of payments bank offering internet banking services. However, RBI does not envisage payments banks to be “virtual” banks or branchless banks.

The 'payments' bank will be required to have at least 25 per cent of physical access points including business correspondents in rural centres and a controlling office for a cluster of access points should also be established for control over various outlets and customer grievance redressal, it added.

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