The Reserve Bank of India issued Guidelines for Licensing of Small Finance Banks in the Private Sector. As per the issued guidelines, the minimum paid-up equity capital for small finance banks shall be 100 crore rupees.
The norms for small finance banks would allow mobile firms and supermarket chains, among others, to enter the banking sector. The move aims at deepening financial inclusion and boost saving habits.
1.The purpose of the small banks will be to provide a whole suite of basic banking products such as deposits and supply of credit, but in a limited area of operation.
2. The objective for these Small Banks is to increase financial inclusion by provision of savings vehicles to under-served and unserved sections of the population, supply of credit to small farmers, micro and small industries, and other unorganised sector entities through high technology-low cost operations.
3.Resident individuals with 10 years of experience in banking and finance, companies and Societies will be eligible as promoters to set up small banks. NFBCs,micro finance institutions (MFIs), and Local Area Banks (LABs) can convert their operations into those of a small bank. Local focus and ability to serve smaller customers will be a key criterion in licensing such banks.
4. Loans and advances of up to Rs 25 lakhs, primarily to micro enterprises, should constitute at least 50 per cent of the loan portfolio.
5. For the first three years, 25 per cent of branches should be in unbanked rural areas.
10 Companies got Small Bank Licences
1. Au Financiers (India) Limited, Jaipur
2. Capital Local Area Bank Limited, Jalandhar
3. Disha Microfin Private Limited, Ahmedabad
4. Equitas Holdings P Limited, Chennai
5. ESAF Microfinance and Investments Private Limited, Chennai
6. Janalakshmi Financial Services Private Limited, Bengaluru
7. RGVN (North East) Microfinance Limited, Guwahati
8. Suryoday Micro Finance Private Limited, Navi Mumbai
9. Ujjivan Financial Services Private Limited, Bengaluru
10. Utkarsh Micro Finance Private Limited, Varanasi.
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