The Reserve Bank of India (RBI) has granted ‘in-principle’ approval for 10 companies to set up small finance banks.
The approval will be valid for 18 months to enable the applicants to comply with the requirements.
The firms include Au Financiers (India) Ltd., Jaipur, Capital Local Area Bank Ltd., Jalandhar, Disha Microfin Pvt., Ahmedabad and Utkarsh Micro Finance Pvt. Varanasi, Equitas Holdings Pvt., Chennai, ESAF Microfinance and Investments Pvt., Chennai, Janalakshmi Financial Services Pvt., Bengaluru and Ujjivan Financial Services Pvt., Bengaluru.The RBI also granted permission for RGVN (North East) and Microfinance Ltd., Guwahati, and the Navi Mumbai-based Suryoday Micro Finance Pvt.
“Until a regular licence is issued, the applicants cannot undertake any banking business,” RBI said in the press release. The RBI said that it intends to use the learning from this licensing round to appropriately revise the guidelines and move to giving licences more regularly, that is virtually ‘on tap,’ going forward.
The central bank said that it selected the applicants after three different committees contributed to the final decision, backed by a detailed case study of each applicant.
The scrutiny involved assessment of financial soundness, proposed business plan, fit and proper status based on due diligence reports received from the regulators, investigative agencies and banks, said RBI.
“An important factor was proposed reach into un-banked areas and under-served sections of the population,” RBI added. The RBI received 72 applications for small finance banks.
from Chennai writes
Roll out of Equitas BankEquitas Holdings Pvt. is the only Chennai-based NBFC-microfinance institution to have won the RBI’s nod to start a small finance bank. Talking to The Hindu , Equitas Managing Director, P.N. Vasudevan said: “RBI has given us 18-months time to start the banking operations. We will start thinking now about our next step. We are not going to stop microfinance business, but we will be adding liability side to our lending activity. We want to start it as soon as possible.”
Equitas Microfinance Pvt., Equitas Finance Pvt. and Equitas Housing Finance Pvt. will be merged to create the Equitas Bank, Mr. Vasudevan said. Currently, Equitas Holdings has 370 branches, employing more than 7,500 people.
