List of banking aspirants in India grows
The list of banking aspirants in India is growing with the Reserve Bank of India receiving two new applications as part of the on tap licensing for Small Finance Banks. Bangalore based business management software company Tally Solutions and Mumbai based financial intermediary Cosmea Financial Holdings have applied with the regulator for a small finance bank licence.
There are 11 licensed small finance banks in India. Many of these banks have migrated from their initial business as a non-bank finance company or a microfinance institution to a small finance bank.
Earlier, in April, the RBI had said that eight institutions and individuals have applied for on-tap licences to set up universal banks and small finance banks. UAE Exchange Financial Services, Repatriates Cooperative Finance and Development Bank and Chaitanya India Fin Credit, an entity headed by Flipkart co-founder Sachin Bansal, had sought licences for universal banks.
Vsoft Technologies, Calicut City Service Co-operative Bank Ltd, Akhil Kumar Gupta and Dvara Kshetriya Gramin Financial Services were interested in setting up small finance banks, the RBI had said.
The RBI in June had given its in principle approval to Centrum Financial to set up a small finance bank. It had set up an advisory panel in March led by former deputy governor Shyamala Gopinath to evaluate the applications from universal and SFBs, with the latter mandated to focus on priority sector lending and small loans.
RBI in 2019 had introduced on tap licensing for small finance banks. As part of the guidelines, the regulator had set a minimum paid up voting equity capital or net worth requirement of Rs 200 crore. For urban co-operative banks looking to convert into small finance banks the initial net worth requirement was Rs 100 crore, which has to be increased to Rs 200 crore within five years from commencement of business.
With the Covid pandemic affecting small borrowers, RBI had allowed priority sector classification for loans from small finance banks to microfinance institutions for on-lending.