Mumbai: A week after Budget statement, the Reserve Bank on
Thursday issued draft strategy for setting up of 'local feel' small banks,
which will pay out small-ticket loans to farmers and businesses.
The central bank also issued draft strategy for setting up of sum banks, which will cater to marginalized sections of society, counting migrant laborers, for collecting deposits and remitting funds.
Such banks can be set up with a least amount capital of Rs 100 crore as against Rs 500 crore necessary for normal profitable banks, according to the guidelines.
"Both payments banks and small banks are ‘niche’ and 'differentiated' banks, with the ordinary objective of furthering financial addition," the RBI said while issuing draft guidelines for licensing of expenses banks and small banks.
The future small banks will supply a whole suite of basic banking crop such as deposits and supply of credit, but in a incomplete area of process, it said.
The central bank also issued draft strategy for setting up of sum banks, which will cater to marginalized sections of society, counting migrant laborers, for collecting deposits and remitting funds.
Such banks can be set up with a least amount capital of Rs 100 crore as against Rs 500 crore necessary for normal profitable banks, according to the guidelines.
"Both payments banks and small banks are ‘niche’ and 'differentiated' banks, with the ordinary objective of furthering financial addition," the RBI said while issuing draft guidelines for licensing of expenses banks and small banks.
The future small banks will supply a whole suite of basic banking crop such as deposits and supply of credit, but in a incomplete area of process, it said.
On the other hand, payments banks will offer a incomplete range of crop such as receipt of insist deposits and remittances of funds. They will have a extensive network of access points chiefly in distant areas, either through their own branch network or through Business Correspondents (BCs) or through networks provided by others.
Foreign savings in these new category banks would be as per the FDI rule.
The existing non-bank pre-payment tool issuers, non-banking money companies (NBFCs), corporate BCs, mobile telephone companies, super-market chains, companies, real sector cooperatives and public sector entities may be relevant to set up a payments bank.
In case of small banks, occupant persons with 10 years of knowledge in banking and finance, companies and Societies will be entitled as promoters to set up small banks.
NBFCs, micro economics institutions (MFIs), and Local Area Banks (LABs) can also opt for change into small banks.
"Preference will be given to professionals from banking or monetary sector, NBFCs and MFIs to set up small banks, if they meet the 'fit and proper' criteria," the draft said.
Local focus and the aptitude to serve lesser customers will be a key principle in licensing such banks, it said.
"The area of operations of the small bank will usually be controlled to adjacent districts in a all the same bunch of States/Union Territories so that the bank has the 'local feel' and culture," it said, adding up, the bank may be permissible to enlarge in one or more states with physical closeness.
In his Budget speech on July 10, Finance Minister Arun Jaitley had said: "RBI will create a structure for licensing small banks and other differentiated banks. Differentiated banks serving niche welfare, local area banks, payment banks etc. Are contemplated to meet credit and remittance needs of small businesses, unorganized sector, low income households, farmers and migrant work force."
Previous in April, the RBI had given in-principle endorsement to IDFC and Bandhan monetary Services to set up developed banking operations.