RBI lays down guidelines for payments banks’ SFB licence

Syllabus subtopic: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

News: Payments banks willing to convert themselves into small finance banks (SFBs) can apply for such a licence only after five years of operations, the Reserve Bank of India (RBI) said in the final guidelines on on-tap licensing for SFBs.

Prelims and Mains focus: About Payment banks, small finance banks and their significance in financial inclusion, about CRILC

Eligibility

Existing payments banks (PBs), which are controlled by residents and have completed five years of operations, are also eligible for conversion into small finance banks after complying with all legal and regulatory requirements of various authorities and if they conform to these guidelines.

The minimum capital for setting up an SFB has been mandated at ?200 crore, the RBI said, adding for primary (urban) cooperative banks (UCBs), which wish to become SFBs, the initial requirement of net worth will be ?100 crore, which will have to be increased to ?200 crore within five years from the date of commencement of business.

About the guidelines

To reduce the concentration risk in the exposures of primary (urban) cooperative banks and to further strengthen the role of UCBs in promoting financial inclusion, certain regulations will be amended.

The guidelines would primarily relate to exposure norms for single and group/interconnected borrowers, promotion of financial inclusion, priority sector lending, etc. A draft circular proposing the changes will be issued shortly.

The banking regulator also added that it decided to bring UCBs with assets of ?500 crore and above, under the reporting framework of the Central Repository of Information on Large Credits (CRILC).

Note: to know about Central Repository of Information on Large Credits (CRILC) framework, click on the link below

http://www.irisbusiness.com/blog/2016/10/crilc-framework-tool-financial-institutions-monitor-npas

Source: The Hindu

Join Our Telegram

In a surprise, RBI keeps interest rates unchanged

Govt. procured only 3% of pulses, oilseeds proposed for this season

India–Azerbaijan

05 Apr, 26
SHARE

A year after tensions arising from Operation Sindoor, India and Azerbaijan have taken steps to restore and normalise bilateral relations. The 6th round of Foreign Office Consultations, held in Baku, marked the first such engagement since 2022, signaling renewed diplomatic momentum. Recent Diplomatic Engagement During the consultations, bo

India–Australia Economic Cooperation and Trade Agreem

04 Apr, 26
SHARE

The India–Australia Economic Cooperation and Trade Agreement has completed four years since its signing. Both countries now aim to build on this progress through strengthened collaboration and ambitious targets, including reaching AUD 100 billion in bilateral trade by 2030. What is the India–Australia Economic Cooperation and Tra

ADR Report on Political Funding

03 Apr, 26
SHARE

A recent report by the Association for Democratic Reforms (ADR) analyses donations of ?20,000 or more declared to the Election Commission of India (ECI) by national political parties for FY 2024–25, highlighting transparency and accountability in political financing. Key Findings Massive Funding Surge Total donations to nationa

Maritime Chokepoints

03 Apr, 26
SHARE

Maritime chokepoints are narrow channels along global shipping routes where maritime traffic is concentrated. These points are geopolitically and economically critical, as they handle a large proportion of global trade, especially energy shipments. Current Relevance Over two-thirds of seaborne energy trade passes through a handful o

US-Israel-Iran War

01 Apr, 26
SHARE

Following the launch of Operation Epic Fury (U.S.) and Operation Roaring Lion (Israel), the geopolitical landscape has shifted fundamentally with the confirmed death of Iran’s Supreme Leader, Ayatollah Ali Khamenei.Iran retaliated through Operation True Promise 4, launching missile attacks against Israel and nearby Gulf states. The escala