RBI issues draft rules for small banks in financial inclusion push

MUMBAI Thu Jul 17, 2014 6:50pm IST

A cashier (L) counts currency notes as customers wait inside a bank in Hyderabad March 22, 2010. REUTERS/Krishnendu Halder/Files

A cashier (L) counts currency notes as customers wait inside a bank in Hyderabad March 22, 2010.

Credit: Reuters/Krishnendu Halder/Files

Related Topics

MUMBAI (Reuters) - The Reserve Bank of India (RBI) on Thursday issued draft guidelines for those seeking a license to set up a payments banks or a small bank, as part of its efforts to expand banking services to more businesses and poor households.

The minimum paid up capital required for both categories of bank licenses would be 1 billion rupees ($16.62 million) of which the promoter would have to contribute at least 40 percent initially, the RBI said.

Payments banks can accept deposits and remittances of funds but cannot provide loans. Small banks can lend, but have more limited areas of operations than a full-fledged commercial lender.

The guidelines are part of the RBI's push to set up smaller banks that can more easily penetrate into India's hinterland and increase lending to farmers, small traders and businesses.

"Both, payments banks and small banks are 'niche' or 'differentiated' banks, with the common objective of furthering financial inclusion," the RBI said in the draft rules.

The RBI in April granted its first two bank licences in a decade in a country where half the households are still outside the banking system.

The central bank had said then it would move to grant bank licences more regularly and would work on a policy for having "differentiated" bank permits.

Under the guidelines provided on Thursday, mobile phone carriers, super-market chains, co-operatives, and non-banking financial companies will be eligible to apply for permits for setting up payments banks.

Meanwhile, resident individuals with ten years of experience in banking and finance, companies and societies, non-banking finance companies and micro-finance institutions will be eligible for setting up small banks.

Details of the draft rules - bit.ly/UdIhpT

($1 = 60.1800 rupees)

(Reporting by Himank Sharma and Devidutta Tripathy; Editing by Rafael Nam)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS EXCLUSIVE

REUTERS SHOWCASE

iOS 8 Issue

iOS 8 Issue

iOS 8 causing Bluetooth connectivity issues - Apple news blog  Full Article 

Modi In U.S.

Modi In U.S.

Obama, Modi work to deepen improving U.S.-India ties  Full Article | Full Coverage 

NYT Job Cut

NYT Job Cut

New York Times to cut jobs as new products disappoint  Full Article 

Factory Activity

Factory Activity

Factories expand at slowest pace this year in September  Full Article 

Monetary Policy

Monetary Policy

RBI not biased towards either raising or cutting rates - Rajan  Full Article 

Weak Demand

Weak Demand

Weak demand hits factory activity across Asia, Europe  Full Article 

Pimco Fund

Pimco Fund

Pimco Total Return Fund posts record $23.5 bln net outflow in Sept  Full Article 

Hopeful of Profit

Hopeful of Profit

GM sees first European profit in 2016 after years of losses  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage