payment & small finance bank race
TRANSCRIPT
PRESENTATION OUTLINE
INTRODUCTION OF TOPIC
POLICIES IN PAYMENT & SMALL FINANCE BANK
PROCEDURE FOR LICENSING OF SMALL FINANCE & PAYMENT BANKS
MAJOR CONTENDERS
RESTRICTIONS/CHALLENGES FOR SMALL FINANCE AND PAYMENTS BANKS
CONCLUSION
INTRODUCTION
RBI had piloted the idea of payment and small banks
to extend basic banking to millions who didn’t have access
to banking and financial services. Encouraging alliances for
starting payment banks.
Objective of payments banks is to increase financial
inclusion by providing small savings accounts,
payment/remittance services to migrant labour, low
income households, small businesses.
PROCEDURE FOR LICENSING OF SMALL
FINANCE & PAYMENT BANKS
An external advisory committee (EAC) comprising eminent
professionals will evaluate the applications.
The EAC will give suggestions, but the final decision of issuing in-principle approvals will be taken by RBI.
The validity of the in-principle approvals will be 18 months
RIL, India’s largest private sector group, said it had set
up a joint venture with State Bank of India (SBI), the
country’s largest bank, which would hold up to 30 per cent
stake. “The payment bank will leverage SBI’s nationwide
distribution network and risk-management capabilities.
Aditya Birla Nuvo, the largest shareholder in Idea Cellular,
plans to own 51 per cent of its proposed payment bank, while
Idea will own the rest. Later, Idea could raise its holding to 60
per cent.
Future Group said the banking entity, to be called NuFuture
Payments Bank, would work towards extending RBI’s mandate
of financial inclusion by focusing on the group’s core
consumer groups that included women, migrant workers, self-
employed people, farmers and local entrepreneurs.
RESTRICTIONS/CHALLENGES FOR SMALL
FINANCE AND PAYMENTS BANKS
Small finance banks:
Will need to ensure 75 per cent of its loans are in priority sectors
Will need to focus on small loans; at least 50 per cent of loan
portfolio must have advances of up to Rs 25 lakh
Annual branch expansion plans need prior approval of RBI for initial
five years
Will not be allowed to set up subsidiaries to undertake non-banking
financial services
CONT.
Payment banks: Such entities will be allowed to hold up to Rs 1 lakh per individual
customer initially
Will not be allowed to accept deposits from non-resident Indians
Will not be permitted to issue credit cards and offer loans
Will not be allowed to set up subsidiaries to undertake non-banking
financial services