Small finance bank licences in Sept: Rajan - After granting in-principle approval to 11 applicants for payments banks, Reserve Bank of India (RBI) governor Raghuram Rajan said licenses for small finance banks will be announced next month.
The RBI received 72 applications for small finance bank licenses and 41 applications for payment bank licenses. Rajan said that new payments banks would not pose any threat to the existing banks and the new entities would rather serve as 'feeder' for the universal banks.
The RBI granted approval for payments banks, including big names such as Tech Mahindra, Reliance Industries, Aditya Birla Nuvo, and even Vodafone and Airtel. Those who applied for small finance banks include IIFL Holdings, DHFL, Lulu Forex, SKS Microfinance, Ujjivan Financial and UAE Exchange.
The payments banks will provide payments and remittance services, but cannot issue credit cards or accept deposits over Rs. 1 lakh. They can issue debit and ATM cards and also distribute insurance and mutual fund products.
On the other hand, small finance banks can provide basic banking services such as accepting deposits and lending to the unbanked sections such as unorganized sector entities, micro business enterprises, micro and small industries and small farmers.