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Licences of small, payments banks in a few months


Mumbai: The Reserve Bank is in the middle of processing over 100 applications for small finance banks and payments banks and may issue licences in a few months, a top central bank official said.

“We are processing them (applications) and hope to issue licences to fit-and-proper applicants in a few months. We hope these new entities will speed up our financial inclusion efforts in a big way,” RBI Deputy Governor R Gandhi said during a lecture at Sastra University in Tamil Nadu recently.

The RBI has received 72 applications for small finance banks and 41 for payments banks.

The objective of licensing small banks is to promote financial inclusion by offering savings vehicles and credit to small business units and other unorganised sector entities.

Payments banks, too, are also positioned to widen the financial reach by providing small savings accounts and payments/remittance services to migrant labour workforce, low income households and other unorganised bodies, among others.

Gandhi further said RBI has granted in-principle approval for two new private sector universal banks (IDFC and Bandhan Financial Services).

“We have also expressed our intention to make the universal bank licences available ‘on tap’,” he added.

The Deputy Governor said the available options for the RBI to facilitate banking expansion are through private sector lenders and foreign banks.

For well-documented reasons, he said RBI has been very cautious of allowing unrestricted and unbridled growth of foreign banks in India through their branch banking mode.

“Hence, after a long process of consultation since 2005, finally in November 2013, we came out with our policy for allowing foreign banks through the wholly-owned subsidiary model. The scheme is yet to take off though two foreign banks have since approached us formally in this regard,” Gandhi added.

Though the reach and scope of banking has increased, the huge demand for financial services remains unfulfilled.

It is a “matter of concern”, Gandhi said that even with 150 domestic commercial banks and over 2,700 co-operative banks operating, just about 40 per cent of the adults have formal bank accounts.

Commercial banks comprise 26 public sector banks, 20 private, 44 foreign, 4 local area banks and 56 RRBs.

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