Suitors line up for niche banks

November 27, 2014 10:36 pm | Updated 10:36 pm IST - MUMBAI / NEW DELHI:

With the Reserve Bank of India issuing final licensing norms for small finance and payments banks, a host of potential suitors, including Shriram Capital and Muthoot Finance, on Thursday evinced initial interest in setting up such niche entities.

However, they will take a final call on applying to the RBI for such licences after going through the fine prints of the guidelines, which were released this evening.

Those having expressed their interest in seeking payments banks licence included payment solutions providers Itzcash and Oxigen, business correspondent company Fino, while Muthoot Finance and Shriram Capital may apply for small finance banking licence.

“We will definitely apply for payment banks licence. It is a good beginning. There have been very positive changes in the guidelines but in some we need more clarity,” Oxigen Indian Private Limited Founder and Managing Director Pramod Saxena told PTI.

Itzcash Card’s Managing Director Naveen Surya said, “We are keen on applying for Payments Banks. We could deliver more products and this will also help in improving our portfolio.”

Fino’s COO and ED Rishi Gupta said the business correspondent company was keen to enter the payments banks fray and was encouraged by the clarity in the final guidelines on factors such as listing and selling of third party products.

NBFC lender Shriram Capital is much more keen on the small finance bank, and will be studying the fine print before making an application, its group director G. S. Sundararajan said.

Gold loans provider Muthoot Finance’s director Thomas George Muthoot said the company was interested in applying for small finance banks, and would be studying the guidelines.

“The SFB is an experiment around the community banking in the U.S. and may need time to stabilise,” said Ashvin Parekh, who runs an advisory firm, said. He, however, added that one needed to wait and watch regarding the efficacy because of the not so successful experience with the LABs (local area banks).

Mr. Parekh expressed concerns over the viability of the payments banks, which have to depend on fees alone for their revenues, but said companies like those in telecom might be interested.

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