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RBI gets applications for ‘on tap’ licences

Topics Covered: Inclusive growth and issues arising from it.

RBI gets applications for ‘on tap’ licences:


Context:

The Reserve Bank of India has received four applications each for on-tap universal private bank licences and small finance bank licences.

  • This is part of the RBI’s guidelines for such licences released in August 2016 and December 2019 respectively.

Who can apply?

According to the guidelines released by the central bank in August 2016:

Eligible entities seeking universal bank licences must be:

  1. Individuals/entities with at least 10 years of experience in banking and finance at a senior level or private companies or groups with at least 10 years of successful track record.
  2. Groups or companies applying for such licences must have assets of Rs 5,000 crore or above and the non-financial businesses don’t account for 40% or more of these assets.

To be eligible to apply for a small finance bank licence:

  1. Individuals must have at least 10 years of experience in the banking and finance sector at senior levels.
  2. Groups, companies, existing payments banks, non-banking finance companies, microfinance companies, local area banks and cooperative banks applying for these licenses must have at least five years of successful track record.

Background:

In April 2014, the RBI had given in-principle approval to Bandhan Bank Ltd. and IDFC Bank to start universal banking operations. IDFC Bank has since merged with Capital First Ltd. to form IDFC First Bank.

InstaLinks:

Prelims Link:

  1. What is on tap licensing?
  2. Eligibility for universal bank licence.
  3. Eligibility for a small finance bank licence.
  4. What is universal banking?
  5. What are NBFCs? 

Sources: the Hindu.